Mid-Week Technical Outlook: Exotics & Minors In Focus

The next few days promise to be incredibly eventful and volatile for financial markets thanks to major central bank decisions, earnings from tech titans, and key economic reports.

Caution remains the name of the game across markets as investors adopt a guarded approach towards riskier assets with all eyes on the Fed rate decision this evening. In Europe, shares edged higher but US equity futures slipped amid the growing tension and anticipation. Looking at currencies, the dollar has slipped against G10 majors while gold prices staged a sharp rebound from the $1900 region.

Over the past few weeks, we have been covering the dollar and other major currencies but today our attention falls not only on exotics but minor currency pairs. In the FX universe, a minor refers to non-USD currency pairs while exotics are the currency of a developing economy paired with another major. Exotics are notoriously known to be far less liquid than majors and explosively volatile…

While minors and exotics may be less popular than majors and often experience more wild swings thanks to less liquidity, they could still offer trading opportunities. So if you want a quick break from the dollar and other major currency pairs, check out the trading setups below.

GBPJPY trapped within a range

The GBPJPY remains trapped within a 300-pip range with resistance at 162.00 and support at 159.00. A breakout/down could be on the horizon with the correct fundamental spark. On Thursday, the Bank of England is expected to hike interest rates by 50 basis points to tame inflation.  The outcome of the meeting may have an impact on the GBPJPY in the near term. Talking technicals, a breakdown below 159.00 may open a path toward 156.00. Should prices push back above 162.00, the GBPJPY could attack 164.00.

EURJPY ready to resume selloff?

The technical bounce on the EURJPY could be over if prices fail to conquer the 141.50 level. Bears remain in some control with prices respecting a choppy bearish channel on the daily charts. A decline back under the 200-day Simple Moving Average could trigger a selloff towards 139.00 and 138.00, respectively. If prices can break above the 50-day SMA at 142.00, then a move toward 144.00 could become reality.

USDZAR set to slip?

It remains a choppy affair with the USDZAR as the currency swings between losses and gains. Prices seem to be in a wide range with some support found at 17.20. A strong breakdown below this level could encourage a move below the 50-day SMA and 200-day SMA at 16.95. Should prices experience a rebound, the first point of interest will be at 17.50 and 17.74, respectively.

EURAUD breakout/down?

As the subtitle says, the EURAUD can either experience a strong technical bounce from 1.5270 or break down below this point to hit 1.5070. The trend looks flat on the daily charts but prices are trading below the 100 but above the 200-day Simple Moving Average. Should 1.5270 prove to be reliable support, a move back toward 1.5670 after breaking through 1.5450.

AUDNZD bulls in control 

This currency pair remains firmly bullish on the daily timeframe. There have been consistently higher highs and higher lows while the MACD trades to the upside. A solid breakout and daily close above 1.1000 could encourage a move higher towards 1.1150 and 1.1250, respectively. Should 1.1000 prove to be reliable resistance, prices may sink back towards 1.0900.