Some big moves in currencies today following a mixed bag of data.
First data up this Tueday: U.K. CPI and PPI. A bit of a mix ahead of Wednesday's BoE minutes, with markets now expecting a 6 to 3 vote against QE. If we get a much closer vote we could see the pound dip again.
Following the U.K., data released were eurozone CPI (better than expected) and European and German ZEW Economic Sentiment, both worse than expected.
This data mix from the U.K. and eurozone gave a little pause for thought during the day, with both pairs consolidating.
Lunch time saw the release of CPI data in the U.S., coming in worse than expected. The recent run of poor U.S. data has weighed heavy on the USD (hence the title of our Week ahead analysis) and this was no different. The euro and Pound shrugged off earlier disappointments and pushed higher on the news, both closing the day at key resistance levels.
Key data on Wednesday comes in the form of the BoE minutes, BoC Interest Rate Decision and Report and potential commentary out of FOMC voters in the afternoon.
recent commentary from FOMC members has continued to highlight the ongoing need for QE, which also contributes to U.S. data woes. Further comments could again see a push lower in USD.
EUR/USD
We have been highlighting that we expect this pair to test the 1.3220 mark and its recent run to test the 1.3200 mark was good to see . The pair could drop lower from here but there are a few signs pointing to the potential for further gains.
Ichimoku lines are now close to crossing pointing to further upside (although currently they are level), COT report positioning came off of lowers to move higher and Retail Order book is still pushing for shorts.
Our inhouse Order book systems continue to like EUR/USD longs but it is pretty close to switching. We maintain our short term Bullish/Long Term Bearish outlook, but a push past the 1.3200 level could swing this view ot a more Bullish stance.
Personal Bias: Short term Bullish / Long Term Bearish
Support: 1.3050 / 1.3100
Resistance: 1.3180 / 1.3240
Strategy: Wait for clear signals of price rejections off of key levels.
GBP/USD
Recent chop in this pair has caused a real build up of key levels and orders in the market, causing swings around current levels. We maintain our outlook that this pair could move lower from these levels, but its current range is relatively wide.
Key this week could be the MPC minutes and the timing of the vote for further QE.
Personal Bias: Neutral to Bearish (Order book systems currently Bullish)
Support: 1.5245
Resistance: 1.5365 / 1.5460
Strategy: Looking for short entries on strong breaks of support or rejections of resistance.
AUD/USD
What a ride in the Aussie. The pair pushed higher to correct some of Monday's aggressive move. The AUD/USD feels like it is continuing to trade in its weekly range and both a move lower to 1.0200 or a move back to 1.0600 could be on the cards.
Personal Bias: Bearish
Support: 1.0340 / 1.0370
Resistance: 1.0480
Strategy: Stand aside, wait for clear signals
USD/JPY
The pair pushed slightly higher. We continue to like using support levels and rejections off of support levels to enter this pair long. Last night's rejection off of the 96.45 level offered a quick 100 pips overnight. Any rejections towards the 95.000 level can be used to buy this pair.
Personal Bias: Bullish
Support: 97.00 / 96.45
Resistance: 98.80 / 99.50
My Strategy: Look for long entries off of support
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