somrat4030
Well-known member
- Apr 18, 2022
- #78
April-18, 2022, Currency trading analysis and market forecast, by forex forum.
USD/JPY has climbed steadily since early 2021. That uptrend stemmed from the 38.2% Fibonacci retracement level from the 1998 to 2011 move. More recently, prices pierced above the 61.8% level. The 2015 high at 125.85 is now within striking distance. On the monthly timeframe, the Relative Strength Index (RSI) is oriented firmly higher within overbought territory, while the MACD oscillator trends higher. Prices may hit that 2015 high, less than 4% away from current prices, in the coming months.
Moreover, the 2002 peak would shift into focus if the Yen weakened enough for USD/JPY to dispatch the 2015 high. The 130 psychological level and the 78.6% Fib level would likely be the major resistance levels before prices would attack 135.16, which is only around 7.5% higher. While that would constitute a rather significant move, given the recent pace, it may not be off the table.
On the other hand, GBP/JPY has spent the majority of Monday’s quiet, holiday-thinned trading session close to more than six-year highs around the 165.00 level, with commentary from Japan’s Finance Minister and the BoJ Governor during Asia Pacific hours failing to support the yen. Neither gave the market much to go on regarding potential policymaker intervention to strengthen the yen, suggesting that GBP/JPY’s recent more than 9.0% rally from March lows may yet have legs to run.
Indeed, while the BoE is getting increasingly worried about weak UK growth as a result of the cost-of-living squeeze, they still intend to lift interest rates higher in the coming months.
Moreover, The EUR/USD traded below Friday’s low and will probably try and rally today.
Bears broke below the March 7 low last Thursday (April 14). However, the bears failed to close below March 7.
Bulls will likely give up here soon, and the market will begin to go sideways to up.
Bulls will buy here, betting that the market will not fall below the April 14 low and will form a micro double bottom with a bull bar closing on its high.
Bulls also have a credible buy signal bar with the April 13 high, so the market will probably have to get back to it. This is because bulls likely bought April 13 high and were willing to buy below the bar as well, confident they could exit back at the April 13 high.
Elsewhere, Last week, the Bank of Canada (BOC) hiked key interest rates by 50bps to 1%, as expected. It was the largest increase in over 20 years and the highest level for interest rates since before the pandemic began in March 2020. In addition, the central bank said it would stop reinvesting the proceeds of its maturing bond holdings, and therefore, beginning the process of reducing its balance sheet.
This week Canada releases CPI. Did the BOC make the right call by hiking 50bps?
Traders will be watching as the data is released on Wednesday. Expectations are for headline CPI to have risen to 6.1% YoY vs 5.7% YoY in February. Core CPI is expected to have risen to 5% YoY vs 4.8% YoY in February. Canada will also release Retail Sales data for February this week. Although the data may be a bit stale, traders will be watching to see if rising inflation affected the Canadian consumer. Expectations for the headline print are only 0.2% MoM vs 3.2% MoM in January. Retail Sales Ex-Autos expectations are just as poor at 0.2% MoM vs 2.5% MoM in January.
USD/CAD has been trading in a range between 1.2454 and 1.2965 since mid-November 2021. On April 5th, price formed a hammer on the daily timeframe, in which price opened near 1.2480, made a false breakdown below the range to a low of 1.2402, and bounced to close near the open.
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On the other hand, The GBPUSD waffled up and down in a narrow trading range on Good Friday. That dynamic helped to converged the rising 100 hour moving average with the falling 200 hour moving average (blue and green lines in the chart above). Those two moving averages are straddling the 1.3053 level currently.
The price in the first few hours of trading today, saw the GBPUSD move above and below those moving averages. However the price fell below the levels earlier in the day, and have stayed below since that break.
Moreover, NZD/USD Vulnerable while under 0.6750
The NZD/USD is trading at 0.6719, the lowest level in seven weeks. The kiwi failed to recover the 0.6750 area and weakened again during the American session as US yields turn again to the upside.
The US 10-year yield stands at 2.85% and the 30-year at 2.96%, the highest level since April 2019. The DXY is up 0.25%, at 100.75, testing the 2022 top. The stronger US dollar weighs on NZD/USD, unable to benefit from higher commodity prices.
The current week is light in terms of economic data, attention will likely continue on Ukraine and Federal Reserve and RBNZ expectations.
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