Forex Majors – Technical Overview And Weekly Price Forecasts

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Forex Majors – Technical Overview And Weekly Price Forecasts

The week ahead is sprinkled with a few volatility-triggering events, especially for the greenback, which appears to be strengthening across the board. The Fed is back in the spotlight this week with the release of the Meeting Minutes so we can expect strong moves Wednesday on most majors.

EUR/USD – Technical Outlook

Apart from the Fed Minutes scheduled Wednesday at 7:00 pm GMT, the EUR/USD will be influenced by a few other Euro-related events such as the German Flash Manufacturing and Services PMIs, both slated for release Thursday Feb 21 at 8:30 am GMT and Draghi’s speech scheduled for Friday Feb 22 at 3:30 pm GMT.

The pair is trading in a pronounced range from a Daily chart perspective but the strengthening of the US Dollar took it briefly below the 1.3000 mark where support is still evident. If support holds we can expect to see an extended climb towards the 100 days Exponential Moving Average (red line on chart) but this scenario could take more than a week to develop. Keep in mind that the latest strong move is bearish, the 1.1210 – 1.1200 a likely target if 1.1300 turns into resistance.

USD/JPY – Technical Outlook

Since the flash-crash on the 3 rd of January this year, USD/JPY has been on a bullish ride and is now trading near 110.80. Currently, there’s a battle waging at the 100-day EMA and the winner will very likely control the medium to long term movement. Considering the way the pair has been moving lately, and the overall strength shown by the US Dollar, it’s very likely we’ll see a continuation of the bullish move above the 100 days EMA. The Relative Strength Index is also moving up, printing higher highs and higher lows, without being overbought which supports that view. First resistance and target is the previous top at 111.10 (which may be reached even before the end of this week), followed by 111.50 and 112.00

USD/CHF – Technical Outlook

The US Dollar has been strengthening against the Swiss Franc as well lately but the pair has just reached a major hurdle, and a potential turning point, at 1.010. Although it is supported by a long term bullish trend line, the pair has printed an almost perfect double top at a strong resistance leveland the Relative Strength Index is in overbought territory. The double top is an inherently bearish chart pattern and the RSI is another indication that we could see a bearish pullback over the days to come, if not a full reversal. If the pair breaks 1.010, a retracement should follow soon after.

GBP/USD – Technical Outlook

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The GBP/USD entered a wide trading range at the end of 2020. Since then it has test for resistance at the top of the range, reaching a high at 1.3210, and is now sitting at support near the middle of said range. The pair is now trading at 1.2900 and has descended below the 100 days EMA were it may consolidate before moving lower. From a longer term perspective, the pair is mostly ranging without a clear direction. This week’s Fed minutes and UK data may change that.

Euro Weekly Technical Forecast: EUR/USD, EUR/JPY, EUR/GBP

Euro, EUR/USD, EUR/JPY, EUR/GBP Technical Forecasts

  • The Euro was on the move this week around the ECB rate decision on Thursday.
  • Christine Lagarde warned of a 2008-like event around the slowdown emanating from the coronavirus.
  • The ECB did not cut rates as was widely-expected but did announce an increase in bond purchases to the end of this year.

EUR/USD Tanks as Risk Aversion Takes Hold

It was a brutal week across global markets as equities continued to sell-off as the world has become engulfed with fears of the coronavirus pandemic. While much remains unknown as to just how much damage might be done, one thing that is sure is that economic slowdowns will take place as one of the few ways to slow the spread of the virus is through social distancing. This means that businesses will take a hit, and for an economy like Europe that wasn’t exactly in great shape to begin with, the slowdown emanating from coronavirus fears could be devastating.

Christine Lagarde had warned of as much in a speech on Wednesday , warning that a 2008-like crisis could show should EU leaders not act swiftly to slow the spread of the virus. This was widely inferred that the ECB would step up the loosening at the rate decision that was set to be announced the following day; and while the bank did announce an increase in bond purchases out to the end of the year, they did not cut interest rates as was widely expected .

Next week will see the theme of fear continue and as the WHO said earlier today, Europe is the new epicenter of the pandemic. Below I look into three of the more popular Euro-pairs with an eye on technical context for next week.

EUR/USD Reverses from Resistance as USD-Strength Rages

Perhaps one of the bigger moves in the FX market was an aggressive rush of strength in the US Dollar as there was a flight-to-quality into cash; and the prior bullish trend in EUR/USD was hit hard after a visit up to a key zone of resistance. That resistance runs from 1.1448-1.1500; the former of those prices coming from the 50% marker of the 2020 major move. That price had previously helped to hold the highs in March of 2020 so, technically, EUR/USD set a fresh yearly high on Monday of this week, albeit temporarily.

Forex Forecast Polls

The Forex Forecast is a currency sentiment tool that highlights our selected experts’ near and medium term mood and calculates trends according to Friday’s 15:00 GMT price. The #FXpoll is not to be taken as signal or as final target, but as an exchange rates heat map of where sentiment and expectations are going.

Weekly Forecast

EUR/USD Forecast: Corrective rebound doesn’t change the doom picture

The EUR/USD pair has staged a substantial recovery this past week, recovering toward the 1.1000 price zone after falling to 1.0635 at the beginning of the week, its lowest since April 2020.

GBP/USD Forecast: Roller coaster ready to dive? UK coronavirus data and first virus-infected NFP eyed

The sharp surge seen on the weekly chart tells only part of the story in an extremely volatile week that saw ups and downs. GBP/USD has been responding to coronavirus headlines, lockdown, central bank action, economic data – and often moving without a clear driver.

Bitcoin Forecast: Coronavirus will either kill Bitcoin or make it stronger

Bitcoin is about to finish the second positive week in a row. The first digital coin has recovered from $5,680 and came close to psychological $7,000 during the week.

USD/JPY Forecast: Risk, if it can’t get worse, can it get better?

The dollar rally faded this week as the panicked funding rush abated, the return on the 3-month US Treasury dipped below zero for the first time in history and the Federal Reserve’s purchase program lowered rates across the yield curve.

AUD/USD Forecast: After rising over 600 pips, the worsening corona-crisis points to fresh falls

AUD/USD surged over 10% from the bottom – but still trades below levels seen earlier this month. A mix of fiscal and monetary stimulus raised the market mood despite the spread of coronavirus.

Gold Forecast: Hunger for physical gold on the rise

Demand for the greenback finally receded this past week, leading to a nice recovery in gold prices. Spot traded as high as $1,643.90 a troy ounce, level reaching on Thursday.

WHAT IS THE FOREX FORECAST POLL?

The Forex Forecast Poll is a sentiment tool that highlights near- and medium-term price expectations from leading market experts.

  • Unique sentiment indicator with a 5-year history
  • For 10 currency pairs (EURUSD, GBPUSD, USDJPY, USDCHF, AUDUSD, NZDUSD, USDCAD, GBPJPY, EURJPY, EURGBP)
  • Survey conducted every Friday and published at 15:00 GMT
  • Serves all time horizons: 1 week, 1 month, 1 quarter – includes an average price for each time horizon
  • Followed by traders, market commentators as well as academics

The #FXpoll is not to be taken as signal or as final target, but as an exchange rates heat map of where sentiment and expectations are going.

HOW TO READ THE GRAPHS?

Besides the table with all participants’ individual prediction, a graphic representation aggregates and visualizes the data: the Bullish/Bearish/Sideways line shows the percentage of our contributors on each of these outlook biases.

This graph is available for each time horizon (1 week, 1 month, 1 quarter). We also indicate the average price forecast as well as the average bias.

WHY SHOULD I USE IT?

Our unique Forex Forecast poll offers you:

  • A sentiment indicator which delivers actionable price levels, not merely “mood” or “positioning” indications. Traders can check if there is unanimity among the surveyed experts – if there is excessive speculator sentiment driving a market – or if there are divergences among them. When sentiment is not at extremes, traders get actionable price targets to trade upon. When there is deviation between actual market rate and value reflected in forecasted rate, there is usually an opportunity to enter the market.
  • No lag in the data: Contrary to other indicators, there is no delay.
  • A very useful tool to combine with other types of analysis of technical nature or based on fundamental macro data, like trading positions, rates table or live chart.
  • Significant sentiment data, based on a representative sample of 25 to 50 leading trading advisors for 5 years. Do not follow a single guru but rather a balanced group of well chosen experts. The Forex Forecast Poll offers a condensed version of several expert’s opinions. Only outlooks are considered that have been committed to publication and therefore have an influence on the market.
  • A tool for Contrarian thinking: People instinctively follow the impulses of the crowd. Sentiment indicators, in turn, lead to “contrarian” thinking. You can read sentiment extremes and avoid being one of the herd. Contrast own opinions and price outlook with a group of leading trading advisors and money managers.
  • A tool to build strategies upon prediction data: Find patterns data for instance if a trend is gaining or losing energy.

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Weekly Forex Forecast

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A Top Down Technical Look at Dollar, Euro, Yen and the Majors

Talking Points:

  • Evaluating the general strength or weakness of individual currencies can open up more opportunities than specific pairs
  • A technical approximation of currency focus is to look at equally-weighted indices for major currencies for technical health
  • We look at concentrated charts of Dollar, Euro, Pound, Yen, Loonie, Aussie, Kiwi and Franc-specific charts

Feed a Trader a Single Trade Versus Establishing Multiple Opportunities

Doing a ‘top down analysis’ on an asset or market usually pertains to a global-macro overview on the fundamental side or is a technical trader’s equivalent by reviewing very high time frame (weekly, monthly) charts. However, there is more that can be drawn from the charts than just the reference to periods which are far broader than the vast majority of most traders’ tolerance. In the FX market, another approach to garnering an overview of what we are dealing with is to look at individual measures of specific currencies. Most of us comb the currency market by evaluating charts of individual exchange rates (such as the EURUSD, GBPUSD or USDJPY). That can happen across opportunities if we are diligent in our rotations, but it can be difficult to keep track in the absence of daily updates. A broader evaluation that can identify trades that we perhaps didn’t even consider is to keep track of the standings for individual currencies. If we knew for example that one of the core currencies was generally on the rise, we could then more efficiently run through its crosses to identify ideal pairings. If we consequently paired the strong currency to a particular weak one, it can establish appeal for a pair before the particulars are in place – preventing us from overlooking and forgetting an opportunity simply because the time isn’t right and technicals not perfectly aligned. So, how can we get this general appreciation of the individual currencies? We can evaluate all of its liquid crosses. Unless you can recall the chart structures from memory and aggregate them into a cohesive picture extemporaneously, it is better to utilize an rely on charts themselves. An equally-weighted index is one of my preferred means of such analysis.

A Technical Overview of Dollar, Euro, Pound and Yen

On the fundamental side, there is remarkable fundamental baggage for the ‘core’ majors. That can create a clear path of influence but it can also trip the market up if there isn’t a clear bead on whatever it is that happens to be in control. Technicals can help clarify a muddled interpretation, but it can also reflect the same lack of conviction. From the Dollar, I see a lack of clarity. From the trade-weighted ICE Dollar Index (DXY) we are dithering around the right shoulder of a head-and-shoulders pattern. Yet, when we de-emphasize the EURUSD’s influence, the Greenback’s performance looks meaningfully different. The currency is still crawling to new year-plus highs and the August peak was already overtaken. That doesn’t offer up a different read on momentum, but it does speak to trend maintenance. From the world’s second most liquid currency, the intent of the EURUSD is a meaningful reflection. The currency has been moving in steady bull and bear series without ever leaving the broad range that has formed through months. Anything Euro should be questioned for intent for trend but may be appropriate for range.

DXY Chart (Daily)

EUR Index Chart (Daily)

From GBPUSD, there is a deeper retreat in the four months from April to August that may lead traders to believe coiled spring for the Sterling. However, an equally-weighted measure shows the Pound last week broke the mid-point of a bearish slide over the same period that stretched a much smaller spanse. That suggests large ticket moves should looked upon with deeper skepticism. In contrast, few Yen crosses seem staged for unbridled trend. Instead, they are more consistently range oriented – though some like the USDJPY are attempting to sell the perspective that a technical break is impending. Yet, if we were to evaluate the benchmark pair from the perspective of its components, question over the intent of a clearance through 113 would have kept us from committing to a move that had little potential for follow through.

GBP Index Chart (Daily)

JPY Index Chart (Daily)

Unexpected Opportunities for the Aussie, Kiwi, Loonie and Franc

Moving further down on the liquidity scales, we come upon currencies that are not as fundamentally restricted and couched in unrealistic technical assumption. The Australian and New Zealand Dollars offer considerable trend in familiar fashion to the AUDUSD and NZDUSD. An equally-weighted Aussie currency index hasn’t carried forward with clear bearish progress but it is trading near lows not seen in over a year. The Kiwi Dollar on the other hand looks to be the carbon copy of its most liquid pairing. A progressive bear trend channel suggests the bearing is inherent to all NZD crosses which can be exploited when favorable technical staging pops up from an ideal peer.

AUD Index Chart (Daily)

NZD Index Chart (Daily)

Perhaps some of the most appealing technical staging of late comes via the Canadian Dollar and Swiss Franc. Both currencies were driven to remarkable moves these past few weeks – CAD rallying sharply following a NAFTA resolution and the CHF dropping as troubles with the EU hit the skids. Each move covered significant enough ground and set off noteworthy triggers for both aggregates and key crosses. As each consolidates and starts leaning against the nascent trends bearings, we are left with an opportunity to throw in with trend should conviction find a second wind or pick off ideal reversal calls with the leverage of ideal counterparts. We look at the majors in technical relief in today’s Quick Take video.

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