Mid-Week Technical Outlook: FX Movers & Shakers

– Financial markets were injected with fresh volatility this week as geopolitical tensions between the United States and China rocked sentiment.

Some action was witnessed across the FX markets yesterday as the mighty dollar regained some of its mojo amid the risk-off mood and hawkish Fed commentary. Even the Japanese Yen fought back briefly, enacting sweet revenge against other G10 currencies before later surrendering gains. Sterling seems to be on standby ahead of the Bank of England (BoE) rate decision on Thursday while oil prices remain under pressure as the OPEC+ meeting looms. After weakening on hawkish comments from Fed officials, gold is likely to trade within a tight range ahead of the US jobs report on Friday.

The second half of the week could be wild for markets given the string of high-risk events and potential market shakers. Situations like this could present fresh trading opportunities across FX, commodity, and equity markets.

Below we will discuss potential movers & shakers to watch out for this week and beyond using technical analysis.

DXY rebounds from 105.00 support

Dollar bulls drew support from the risk-off mood and hawkish comments from Fed officials on Tuesday. After staging a rebound from the 105.00 support level, prices are trading marginally above 106.00 as of writing. Should this level prove to be reliable support, a move back towards 107.30 and 109.14 could be on the cards.

Equally weighted USD Index rebounds

After rebounding from the 1.1700 level, the equally weighted USD Index has found itself back within a wide range. The upside momentum may take prices back towards 1.1950. Beyond this level, bulls could challenge 1.21840.

EURUSD trapped in a range

A classic breakout/down opportunity could be forming on the EURUSD with support at 1.0100 and resistance at 1.0270. A solid daily close above 1.0270 may open the doors towards 1.0350 and 1.0480. Alternatively, a selloff below 1.0100 could inspire a move back towards parity.

GBPUSD waits for BoE

Where the GBPUSD concludes this week may be heavily influenced by the BoE rate decision on Thursday. Key levels of interest can be found at 1.2060 and 1.2350. A move back above the 50-day Simple Moving Average may encourage an incline back towards 1.2350.

AUDUSD back within a range

It’s the same old story for the AUDUSD as prices trade within a very wide range. After yesterday’s steep selloff, prices are back under the 50-day Simple Moving Average. A decline back towards 0.6850 could be on the cards.

NZDUSD breakdown pending?

An appreciating dollar could drag the NZDUSD back below the 0.6220 support level. Such a move may open doors towards 0.6100 and potentially lower. If 0.6200 proves to be reliable support, prices may rebound back towards 0.6375.

USDCAD sticky around 1.2860

The subtitle says it all. Prices remain in a sticky range with 1.2860 acting as a key level of interest. Should this level prove to be reliable support, the next key level can be found at 1.3050. Weakness below 1.2860 may open the doors back towards the 100 and 200-day Simple Moving Average.

EURJPY set to rebound?

After rebounding from the 200-day Simple Moving Average, is the EURJPY primed for a major rebound? The trend remains bearish and prices are trading below the 50 and 100-day Simple Moving Average. Even the MACD is trading below zero, reinforcing the bearish bias on the EURJPY. Prices have the potential to bounce from the 134.50 region towards 138.00 which is below the 100-day SMA. Beyond this point, bulls may target 139.00 and 141.50.

Bonus: Gold

Gold is trading below the 50, 100, and 200-day Simple Moving Average while the MACD is trading below zero. However, prices are respecting a minor bullish channel with resistance at $1785. A strong break above this level could encourage a move towards $1809 and beyond. If the precious metal breaks under $1752, a decline towards $1724 and $1700 could be on the table.