Top Three FX Price Action Themes for Next Week

Talking Points:

– While this week was comparatively light on a information front, subsequent week picks adult considerably. Of note – Non-Farm Payrolls is NOT subsequent Friday. Feb Non-Farm Payrolls will be reported on a following Friday, Mar 10th.

– In today’s piece, we demeanour during 3 of a some-more engaging cost movement themes for traders to follow by subsequent week’s gauntlet of news.

If you’re looking for trade ideas, check out a Trading Guides. And if you’re looking for ideas that are some-more short-term in nature, greatfully check out a Speculative Sentiment Index (SSI) Indicator.

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While this week was comparatively light on a information front, subsequent week picks adult extremely with mixed ‘high impact’ announcements on any day, Tuesday-Friday. Despite a few drivers that were on a calendar for this week, cost movement continued to put in engaging moves opposite a FX-spectrum as another Wednesday annulment took place in a U.S. Dollar. Last week’s Wednesday annulment took place after a clever U.S. CPI kick though before a start of Fed Chair Janet Yellen’s second day of testimony in front of Congress, as partial of a bank’s twice-annual Humphrey-Hawkins report. This week’s USD annulment on Wednesday came-in after a recover of FOMC minutes; highlighting a deeper overload that cost movement in a Greenback is stability to face. On a draft below, we demeanour during this new congestion, and subsequent that, we excavate into 3 of a many impending cost movement themes for subsequent week.

Top Three FX Price Action Themes for Next Week

Chart prepared by James Stanley

Will a Greenback Find Support?

The initial half of Feb gave a coming that an up-trend in a Greenback was prepared to return. But usually forward of Chair Yellen’s second day of testimony, sellers came-in during a pivotal turn on a Dollar around a 101.53 level, that is a 50% turn of a Jan retracement in USD. If cost movement was means to poise a postulated mangle above this level, it would give a coming that a Jan retracement is resolved and that cost movement is prepared to ensue offer ahead. Sellers weren’t carrying any of this, however, and this showed-up again this week on Wednesday after a recover of FOMC mins from a many new assembly 3 weeks ago.

The longer-term viewpoint in a Dollar still stays as bullish, as cost movement is still trade above a insurgency turn that had capped USD-gains around 2015 and many of 2016. But a large doubt during this prove is when bulls competence lapse to start behest a Dollar higher, again. The primary prove of row on that theme, during slightest during current, appears to be a luck of a Mar rate hike. If markets fear that there competence be a somewhat aloft luck of a travel during a bank’s subsequent assembly in June, we could see a knee-jerk greeting of strength in USD. But that doesn’t seem to be a regard during a moment, as markets aren’t looking for that subsequent rate travel until June. This could all change really fast with Fed-speak or a warn information imitation or, perhaps, a twitter or dual from someone in particular.

On a draft below, we’re looking during dual intensity support levels on a shorter-term U.S. Dollar chart.

Top Three FX Price Action Themes for Next Week

Chart prepared by James Stanley

Is Yen Weakness Done?

Also not on a calendar this week were some warn comments from BoJ Governor Haruhiko Kuroda when he spoke about disastrous rates in Japan. It’s flattering zodiacally supposed that a BoJ’s ‘stealth’ pierce to disastrous rates in Jan of 2016 was a flattering bad idea. Not usually did this offer to upset investors in a Japanese economy, though it presented a bank as rather unpredictable; that for a conditions of ‘crisis management’ is a flattering bad characteristic. And a BoJ paid for that decision. While a pierce to disastrous rates elicited a singular day’s value of Yen weakness, a following 4 months were brutally unpleasant as USD/JPY took a swan-dive from ¥120.00 all a approach down to exam a ¥100.00 level.

The BoJ indispensable to make a change, and that’s precisely what happened in Sep when a bank shifted their aim for QE while behaving a ‘comprehensive review’ of stream process outlay. And usually a month and a half after that, a BoJ got a undoubted present in a form of Donald Trump as a ‘Trump Trade’ re-strengthened a Dollar and carried USD/JPY fill-in towards ¥118.50.

But as strength showed in Japanese markets, many of that was denominated by Yen-weakness, the large doubt became when a BoJ competence feel gentle adequate to indeed start creation slight tweaks of narrowing to stream process outlay.

Earlier this week, BoJ Governor Haruhiko Kuroda gave comments that would prove that a bank is removing a bit cozier with this many new marketplace move; when he pronounced that ‘there is not many odds that we will offer reduce a disastrous rate’.

This put a bit of a check on a short-Yen trade as it would seem that a BoJ is initial creation a pierce or charity comments that are simply ‘less dovish.’ But a subsequent judicious step after that would be creation a hawkish move, with some even deliberation a luck of a BoJ rate boost to 0% in a not-too-distant future.

From a technical viewpoint – a Yen has remained clever ever-since these comments came-out, offer giving arise to a thought that a annulment might be stirring in Yen-pairs. On a draft below, we’re looking during USD/JPY penetrate down to a really engaging 80-pip section of support from 111.61 adult to 112.40. The 38.2% retracement of a ‘Trump Trade’ in USD/JPY is in a center of this section during 111.96; and if buyers are incompetent to reason cost movement in this area of support, a awaiting of a ‘bigger picture’ annulment will expected demeanour extremely some-more attractive. While USD/JPY is above this zone, however, a longer-term viewpoint would still be bullish in nature.

Top Three FX Price Action Themes for Next Week

Chart prepared by James Stanley

Has Euro Set a Low?

Next week sees a complicated doing of European data, and after an engaging annulment in EUR/USD this week, a span is primed to pierce for subsequent week. Earlier in a week, before that annulment in USD took place, EUR/USD sank down to a really engaging section of support around 1.0500-1.0527. Buyers showed-up shortly after that support came in-play and gathering prices-higher by ~120 pips. But we are impending a integrate of really engaging intensity points of insurgency that sellers could come-in; and if EUR/USD is means to break-above these levels subsequent week, driven by a engorgement of data, a awaiting of top-side delay in a Euro will expected seem extremely more-likely.

Top Three FX Price Action Themes for Next Week

Chart prepared by James Stanley

— Written by James Stanley, Analyst for DailyFX.com

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