Looking Forward On Major Forex Pairs
With only two weeks left before markets start to quiet down for the year we are keeping our foot on the gas!
What We're Watching
The first notable event for this week is last fridays NFP results, where the number of new jobs added was 224K under the consensus. This served as a critical blow for the USD, and we anticipate the aftershock to wear the USD down throughout this week. Canadian Employment data on the other hand over delivered, adding 42K more jobs than the 20K expected (total 62K). The effects of this will likely be felt this week, making USDCAD shorts an appealing bias for our team.
We have Australia’s RBA Governor Lowe speaking early today, which may spur some AUD upside. Tuesday brings GDP data from both the European Union and Japan, and the next day brings CNY CPI data. Thursday the 10th is set to be a news heavy day, with CAD rate decisions and statements, EUR rate decisions and statements as well as monetary policy statements, and finally USD CPI data. Wrapping up the trading week is more data from gthe EU, with the European council meeting and EUR harmonized index of consumer prices.
In addition to the economic calendar, EUR and GBP traders should be keeping a close eye on news feeds to monitor developments in Brexit negotiations.
AUDUSD has broken above the Q3 highs, pushing the pair into fresh new 2020 highs. End of year forecasts from Westpac predict a 0.75 rate on the pair, and with disappointing NFP results further upside on the AUDUSD seems very probable.
On the hourly chart AUDUSD is holding above the Q3 highs, with intraday resistance around 0.745 and support around 0.7413. Watch the Q3 high for potential support as well as the 100 & 200 moving averages and the intraday trendline. Breaks below all these could pull the AUDUSD back into the 0.732 levels.
EURUSD remains in a strong bull market, having rallied to fresh yearly highs last week. The pair is trending well above the moving averages. Now trading well above the 1.20 level, look for the area around 1.20 for support to come in.
EURUSD has broken below the 21 and 50 moving averages on the 1H chart, opening up some intraday downside on the fibre. Highlighted is the zone around the 1.20 region, where you can see the previous structure.
The pound is also feeling the bullish pressure despite Brexit concerns, as the USD has continuously depreciated over the last few weeks. Price pushed above the Q3 highs but has failed to hold above them.
The cable has rejected out of the Q3 Highs, with some bearish momentum occurring. Still in a strong uptrend, with the 100 and 200 moving averages lying just below price. Traders can also look for the intraday trendline as potential support, with a break below this opening up the downside potential to the daily trendline.
The Swissie has pushed down to a new yearly low. Price currently has stalled at the support trendline, making a potential 4th rejection. If price breaks below this trendline it could keep price in the new trading range between 0.90 and 0.85. Price is well below the daily moving averages.
USDCHF has broken the intraday trendline, and has pushed above the 21 moving average. Also there is divergence on the 1h RSI, a bullish upside indication. We could see intraday upside pressure, however I would expect it to be short lived after the disappointing NFP data.
Price on the USDCAD found daily resistance around the 100 moving average in early November, spurring a bearish rally on the pair. The loonie has since broken through support levels, opening the pair up to further downside.
Price is well below the 1h moving averages, with the RSI indicating that downside is overextended. Watch the intraday trendline and the moving averages for potential upside caps.