Japanese yen roared back with the furry, gaining ground against most Asian currencies as the market sought safety. With gold recovering toward the highs and stock market options flow entering a period of weakness – a stronger US dollar and Japanese yen would be unsurprising.
The week ahead is void of groundbreaking news, although GDP projections and Australian CPI could cause some volatility.
Key News
- Tuesday: USD – CB Consumer Confidence
- Wednesday: AUD – CPI
- Thursday: US- Preliminary GDP
- Friday: CAD – GDP, USD – Core PCE
Pairs In Focus
This week’s pairs in focus revolved around anticipated AUD weakness and perceived JPY strengths, accompanied by heavy retail positioning against these trends.
1. AUD/JPY
This pair had a big move on Friday, February 21, when it swept the Thursday high before fully reversing and breaking through the key support at 95.240. As long as the price stays under that level, it can continue lower, take this monthly low, and eventually reach liquidity at 93.600. Retail traders are overwhelmingly long, with over 80%. Thus, institutional traders can squeeze them out—especially if a healthy pullback occurs and traps more longs.
2. AUD/CHF
This pair experienced a similar price movement, except the price swept the stops on Thursday before retracing on Friday and closing below a key weekly level of 0.57100. As long as it stays below and does not retrace through the resistance above 0.57300, the likelihood grows that it will continue lower toward support at 0.56.
3. GBP/AUD
The plan for GBP AUD is to return the price to the key level above 2.0082, the monthly high. Weekly price action supports this momentum, and retail is mainly short the pair (over 70%), providing a good contrarian pick.
Notes:
- AUD CAD: Swept the high and rejected from key resistance. It could drop back into the range per next week's anticipated price action.
- AUD NZD: As anticipated, it tried challenging 1.11700 resistance, and it failed. Likely to retrace lower.
- AUD SGD: Swept the previous week's high and retraced, likely to continue lower.
- CAD JPY: Bearish, but there is a risk of prolonged range before the next leg lower.
- CHF JPY: Like CAD JPY, there is a risk of prolonged ranging throughout the week.
- EUR AUD: The bearish week played out as anticipated, although it failed to tag the key level of 1.63200. It is likely to move higher.
- EUR JPY: Bearish, but likely to range before the next leg lower.
- GBP NZD: It remains in the weekly range, but its continuous failure at resistance around 2.218 signals a pullback might be coming.
- GBP JPY: Broke through 190.100 as anticipated. A moderate pullback is likely.
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.
