German Federal Elections and President Donald Trump's remarks were the primary drivers of volatility in otherwise fundamental news scarce week. The US preliminary GDP and Core PCE floated the equities market toward the end of the week, bringing a selloff to an end.
As anticipated, the Australian Dollar fell owing to weakening inflation, which signals a better potential for the RBA to cut interest rates. The Aussie lost ground to almost every currency, except the New Zealand Dollar.
Furthermore, the Japanese Yen rally also materialized as anticipated. Still, it is less likely to continue in the coming week, prompting a look into two possible pullback trades since, at the moment, most of the healthy trend moves have been played out in the Asian currency markets.
Still, looking ahead, the upcoming week is full of fundamental events. The BOJ Governor's speech, the ECB's anticipated rate cut, and finally, Non-Farm Employment and Powell's speech by the end of the week provide enough fuel to renew or reverse existing trends. Caution is advised.
Key News
- Monday: USD ISM Manufacturing PMI
- Tuesday: BOJ Gov. Ueda Speech
- Wednesday: USD – ADP, ISM Services PMI, AUD – GDP, CHF - CPI
- Thursday: EUR – Interest Rate, USD – Unemployment,
- Friday: USD – Non-Farm Payrolls, CAD – Employment,
Pairs In Focus
As noted, most of the established trends have been exhausted. While the incoming news could easily serve as a catalyst for new trends, this week's focus is on the possibility of a JPY turnaround. If the JPY weakens and certain crosses break through key levels, it would signal a potential end of the JPY's strength and resumption of a prevailing trend against it.
1. GBP JPY
GBP JPY fared better than other pairs in a week of JPY strength. If this pair closes above the key resistance of 190.200, the doors are wide open for it to attack February highs around 192 and even pull back to a previous key level of 193.900. The daily close above 190.200 is necessary, tho, as intraday spikes could be fakeouts.
2. CAD JPY
CAD JPY declined through 104.800 support but failed to take September's low. Similar to GBP JPY, if this pair can recapture support, it could provide for a sizeable trade higher, although it is less likely owing to sentiment analysis. CAD JPY sentiment is overwhelmingly long, to over 80%. Meanwhile, GBP JPY is only 56% long, and if it flips to a majority short, it could provide an excellent retail squeeze opportunity.
Notes
- AUD CAD: broke through key level at 0.89840, it might continue lower to challenge support around 0.89340.
- AUD NZD: In range around a key level of 1.10860.
- AUD SGD: Broke lower and will likely challenge support from January.
- AUD JPY: Broke September low, establishing a new lower low.
- CHF JPY: In a range. It might pull back higher to 168.120.
- EUR AUD: Weekly support held. IT might challenge the 1.68 resistance.
- EUR JPY: Took out liquidity at lows from August and September 2024. Pullbacks are possible.
- GBP NZD: Established a new high, arriving at levels not seen since 2016.
- GBP SGD: Broke higher but ran into resistance at 1.70100. Pullbacks are possible, but if it breaks, it might go as high as 1.71500.
- GBP AUD: In a strong uptrend, it took out high from December 2024.
- NZD JPY: It is in an established bearish trend but has failed to take August 2024 lows from now on.
- SGD JPY: Weekly support at 111.200 held. The price could range for a while, but bulls should be cautious unless 112.400 is broken.
Note: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article's contents. Readers may use this data for information and educational purposes only.
