Last week brought more 'wait and see' from the FED. The central bank held rates as expected, citing the economy's strength and attributing any recent indicator anomalies to tariff-induced swings in net exports.
The Fed's stance fortified the US dollar, which reclaimed the key psychological level of 100 on the Dollar Index. It also helped support a rally in risk assets like stocks, which have fully erased April's decline. The news also drove Asian currency moves, as the Japanese yen weakened late in the week. Risk-off mode drove investors into other currencies, notably the British pound.
The week ahead is relatively light on news, but those few items are impactful enough to make a big difference. Tuesday will bring the latest CPI news for the US dollar, while Australian unemployment and British GDP projections mark the second part of the week, alongside the latest US retail sales numbers. Powell's speech on Thursday will provide additional clarification on the FED's policy, and any deviations from the tone set last Wednesday could drive volatility.
Key News:
- Tuesday: USD – CPI, GBP – Governor Bailey Speech
- Wednesday: AUD – Wage Price Index
- Thursday: AUD – Unemployment, GBP – GDP, USD – Retail Sales, PPI, Powell Speech
Pairs In Focus
1. GBP SGD
GBP/SGD found a clear footing, forming a double bottom and failing to break to a lower low after a higher high in late April.
The level to look for is 1.73780 on the daily chart, about 100 pips above where the price closed on Friday.
GBP/SGD Daily Chart, Source: TradingView
If support at 1.71530 holds, a sustained push higher could take out the previous highs around 1.76.
2. CHF JPY
This pair has been forming a bullish pennant pattern on the daily chart, with a key level around 174.100, which is the middle of the formation.
CHF/JPY Daily Chart, Source: TradingView
As long as price holds above this level on the daily chart, the price action should be bullish. It has the potential to take out the previous month's high around 176.500 and move toward 177.400, around 250 pips from current levels. Retail sentiment is 69% short, adding to the contrarian trade potential.
Notes:
- AUD/NZD: Continues gaining bullish momentum. 1.09 is the level above the market to watch for.
- AUD CAD: Remains in a ranging motion after fully erasing April’s decline. The key support is around 0.88750, while resistance sits at 0.89750.
- AUD/CHF: It is forming a bearish flag, with a possible support around 0.52800.
- AUD/SGD: Saw a minor pullback higher, but it looks ready to continue the bearish momentum. Key resistance to watch is 0.84250.
- AUD/JPY: Continues to retrace the big decline from March. The key resistance level above the market is at 95.230.
- CAD/JPY: After a fakeout lower, it recovered losses toward the end of the week. To clarify further bullish movement, it has to close above 105.
- EUR/AUD: Tested the support below the market around 1.74300 but failed to break it. This level remains the key for further downside movement.
- EUR JPY: Remains within the established support and resistance zone between 163.850 and 161.135.
- EUR NZD: It stayed flat for the week and shows signs of further ranging price action.
- GBP AUD: Pulled back higher, but ran into an intermediate resistance around 2.0600.
- GBP NZD: Reversed after dipping early in the week, but closed below the key level of 2.25200.
- NZD/JPY: The pair closed the week flat, but the overall bias is bullish, with a potential target of 87.330.
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.
