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Talking Points:
- In this webinar, we used price action to look at setups ahead of tomorrow’s drivers, including speeches from BoJ head Haruhiko Kuroda and ECB President Mario Draghi, along with the Bank of Canada rate decision and the release of FOMC meeting minutes from the meeting held earlier this month.
- The first market we looked at was USD/JPY, which is currently seeing price re-enter the big zone of confluent support/resistance around 111.61. This recent spate of Yen strength was seemingly driven by a comment from Mr. Kuroda last week in which he remarked that he didn’t feel the BoJ would encounter much troubling when exiting from the bank’s stimulus program. Markets inferred that to mean that the BoJ might be talking about stimulus, and this served to reverse that prior trend of weakness, driving prices in USD/JPY below this key zone from 111.61-112.40. With Mr. Kuroda set to speak tonight, we may see some drive of that prior trend of Yen-weakness after markets went a bit heavy on last week’s inference.
- We then moved over to GBP/JPY, which may be a bit closer for bullish trend resumption on intermediate-term charts. The big level to watch here is the 143.54 support swing; if higher-low support can develop above this level, the prospect of bigger picture trend resumption will look considerably more attractive.
- We then moved over to AUD/JPY for a Yen-strength candidate. AUD/JPY remained rather subdued while Yen-weakness was really showing prominently. This highlights a double-top around 84.50, and for Yen-strength or for offsetting Yen-weakness in other setups, this could remain as an attractive venue.
- We then moved over to EUR/USD, which is still rather frothy. Despite the ECB’s insistence that they aren’t yet investigating tapering or ending QE, markets appear to be increasingly expecting that this will actually happen. I would like to see a pullback towards 1.1040-1.1000 before investigating topside, bullish continuation plays.
- EUR/JPY is currently nested up near a key level of resistance around 125.00. If price action can break-above this level, we can then re-assign current resistance as next support in the effort of catching a ‘higher-low’.
- We then moved over to EUR/AUD. The pair is currently in a short-term range near intermediate-term resistance, and this can open the door to bullish continuation plays.
- We then looked at EUR/CAD in a similar formation with a well-defined level of resistance at 1.5167. We’re currently near the support-side of that zone, and the setup of playing the near-term range in the direction of the longer-term trend is currently present.
- We then looked at USD/CAD, and this can be an interesting bullish setup given that tomorrow brings a Bank of Canada rate decision followed by the release of FOMC meeting minutes. We looked at an area to watch for support to hold/further develop.
- We then moved over to Cable. Short-term charts in GBP/USD look downright chaotic. But longer-term, it’s a bit more clear that what we’re seeing is continued resistance around the 1.3000 level as a really significant psychological level has come back into play. This doesn’t mean the end of the up-trend, but it does likely spell that this will take a bit more time the bullish move is ready to continue, absent any new bullish drivers, of course.
--- Written by James Stanley, Strategist for DailyFX.com
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