The currency pair closed just an inch below 1.13. As mentioned in previous week, price could range between 1.12 – 1.13 due to various factors in Eurozone. On the other hand, softer-than-expected US data prevented the pair from collapsing further for the week. The 1.13 level will be a key resistance level to watch and the next key support level to watch will be around 1.121. To break the support level, a stronger momentum will be needed.
Brexit remains the dominating theme for UK assets, with uncertainty likely to continue. The currency pair closed above the support level of 1.28374 for the week. In the weekly timeframe perspective, price closed as a red pin bar with no uptick in volume indicated that while the selling was not extreme, buying force still remains weak. Will it continue to range between 1.277 and 1.314 or is a breakthrough brewing in the background? Uncertainties surrounding the Brexit remains the biggest challenge for the UK economy.
The currency pair managed to stage a modest recovery in the past week after it plunged in the prior week due to RBA’s unexpected dovish turn in its policy stance. As mentioned in last week’s article, trade tensions fueled the economic slowdown of China, which is Australia’s largest trading partner. More than 30% of Australian exports goes to the world's second largest economy and therefore, the AUD is often viewed a proxy to Chinese growth. As long as the US-China trade war remains unresolved, the currency pair will continue to be vulnerable. The strong support region between 0.7-0.705 is still holding the price well and there are potential gains ahead if Australia’s wage growth and employment data release in the upcoming days do not disappoint.
It was broadly expected that a neutral stance on cash rate would be announced last week. There are no key events this week. In the following week, we will have data releases on retail sales QoQ and ANZ Business Confidence. Price rebounded last Wednesday without any excessive volume, therefore price will most likely range between 0.67 and 0.70 until some breakthrough event occurs in the near term.
The currency pair USD/CAD struggled to build on its bullish momentum since last Wednesday and closed below the resistance level of 1.32683 for the week. From the daily timeframe perspective, the pair was ranging for the past 6 days. Volume for last week was slightly higher and will require more strength if it wants to break below the weekly support trendline. This is similar to the WTI trend which showed an uptick in momentum while moving up.
The USD/CHF advances and hit a record high of 1.00989 for 2019 after last Nov high at 1.0128. Looking at the weekly chart, the 1.0100 to 1.0200 area may potentially act as a significant resistance region to absorb further buying. Therefore, a pullback to two favorable support levels 0.989 and 0.980 is possible before it can continue upwards.
This week will be an eventful week for Japan as there are data releases almost every day. A gentle reminder that the Tokyo region has already released CPI figures for January at +0.4% YoY before seasonal adjustment, and up by 0.5% from the previous month on a seasonally adjusted basis. Hence, the impact of the CPI figures will likely be subdued. A significant deterioration in trade talks could boost demand for the safe-haven JPY, while preparations for a Trump-Xi Summit can weigh on the currency. Last week, the bull signal took effect and broke above 110 level and closed at 110.432. Last week’s doji candle suggested both buyers and sellers were uncertain. In addition, volume was higher than the rest of the week from the daily timeframe perspective. Will the 110 level hold to continue its pace upwards or will it slide down further to 106 level? The answer depends on various factors and let us see how the market unfolds.
The information provided here has been produced by third parties and does not reflect the opinion of AxiTrader. AxiTrader has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.
With the Fed content to frame rising US treasury yields as an echo of economic optimism, bond markets take a breather while oil prices have blown off course