Asian Forex Overview (January 27-31)

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The week ahead is riddled with news from multiple key currency markets, but all eyes will be on FOMC, as the US central bank is expected to leave the interest rate unchanged at 4.5%.

As Chairman Jerome Powell's term expires in 2026, with Donald Trump's demands for lower interest rates, it will be crucial to assess Powell's stance and potentially reassert the FED's independence. However, if Trump decides to install a less independent successor, it is possible the market will stop taking Powell seriously and already anticipate next year's policy moves.

Key News

  • Monday – CHF – SNB Chairman Speech
  • Tuesday – USD – CB Consumer Confidence
  • Wednesday – AUD – CPI, CAD – BOC rate decision,  USD – FOMC rate decision, GBP – BOE Speech
  • Thursday – EUR – ECB rate decision, USD – Unemployment
  • Friday – EUR – German CPI , CAD – GDP, USD – Core PCE

Pairs In Focus

1. CHF JPY

JPY saw enhanced volatility following the largely anticipated BOJ rate hike; however, that news failed to meaningfully impact Yen's trajectory, which is still weak. Although there are numerous JPY pairs to trade, CHF JPY might be the best pick, owing to the following technical setup.

  • Price has meaningfully rejected from the lower trendline, which is part of a symmetrical triangle formed over the last six months.
  • Price has broken, retested, and rejected a key level of 171.410.

The ideal setup would be for a price to move higher, with sweep stops around 173 and a daily candle close showing strength. On dips on a lower time frame, an opportunity to buy would present itself, while swing traders could hold this all the way to the upper trendline, posing an opportunity of over 200 pips.

Retail sentiment is 60% short; thus, longs remain a smart move, particularly if this number exceeds 75%.

2. GBP NZD 

After prolonged weakness, the GBP found its footing. It strongly bounced off support and broke range against NZD, signaling potential further strength.

If the price breaks and closes above 2.19, it could provide buying opportunities later in the week. Retail sentiment is overwhelmingly short (80%), signaling a buying opportunity, too.

Notes:

  • AUD JPY:  Bullish with a potential to take December’s high at 99.20
  • AUD CAD: Broke upwards as anticipated but failed to reach the key level of 0.9740.
  • AUD SGD: A potential bullish rotation towards the mean. Long-term target of 0.87440
  • AUD CHF: Broke through 0.57 support but remains below the 0.57300 resistance. The levels are too narrow to produce meaningful setups.
  • CAD JPY:  In a prolonged range, but long-term bullish bias.
  • EUR AUD: Remains in a full-month consolidation without clear direction.
  • EUR JPY: In a channel between 161.65 and 163.85. Any meaningful move has to break and close above or below those two levels.
  • GBP JPY: Bullish after a BOJ resolution.
  • NZD JPY: Bullish, but it has to close above 90.100 for resolution.
  • SGD JPY: Bullish, with a potential to return to 2024 highs.
  • GBP SGD: Bearish, but a pullback is possible. The price needs to stay below 1.68760 to validate shorts.

Disclaimer:

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.

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Stjepan Kalinic

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