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Talking Points:
- The past two days have presented some very interesting drivers across global markets, and tonight brings a Bank of Japan interest rate decision. In this webinar, we used price action to look at setups in the aftermath of what’s already happened while attempting to anticipate what may take place.
- We started off with USD, as the Greenback has been on the move since yesterday morning. While most attention was focused on the Fed, a disappointing CPI and Retail Sales print in the morning drove the Greenback to a fresh seven-month low well-ahead of the Fed’s announcement. When the Fed did announce the hike, the Dollar rallied but was unable to move-up to pre-US session levels. It wasn’t until the European session this morning that the Dollar caught a significant bid to move up-to test a prior resistance level at 97.50; and while the short-term price action here has been decidedly bullish, the longer-term bearish formation still applies.
- We then moved over to USD/JPY as one of the more attractive ways to look for USD-strength. The Bank of Japan meets tonight, and it appears that we’re seeing traders position for Yen-weakness ahead of tonight’s announcement; and this could be driven by the presumption that the Bank of Japan will remain ultra-dovish. Given the amount of run that we’ve seen in USD/JPY over the past 24 hours, traders are going to need to find closer swing points to justify short-term bullish trades. Or, alternatively, can cast their gaze elsewhere when looking for Yen weakness, such as….
- EUR/JPY: This was previously a high-flying trend that saw a bit of retracement around the ECB’s meeting last week but, notably, respected longer-term support levels. While both the ECB and BoJ appear to be in a position in which they have to fend of ‘taper tantrum’ fears, it would also appear that markets are giving the ECB less room to work with as the bullish Euro trend has lasted for much of 2017 while the Bullish Yen trend has gone through a series of starts and stops, pun intended.
- We then moved over to GBP/JPY which is sitting underneath a very big level of 141.59. This is the 50% Fibonacci retracement of the ‘post Brexit move’ and there’s also a trend-line projection here from the recent bearish channel, as we discussed last week. If prices break above this confluent level of resistance, top-side breakouts could be favored.
- EUR/USD: short-term bearish but the longer-term bullish setup still very much applies. Particular interest can be paid towards support levels of interest around 1.1107 and 1.1075/80 for bullish continuation strategies.
- GBP/USD: Interesting reaction this morning after the BoE’s 5-3 vote to keep rates flat. We discussed this in this morning’s Market Talk, and now that we have a few more hours of price action filled-in, this looks like more of a short-side setup.
- EUR/GBP: Attractive bullish setup with support showing around .8720.
- AUD/USD: Another potential long setup, primarily based off of short-term support showing at a higher low (4 hour chart).
- NAS100 – continues to test the support side of a very bullish channel. We’ve seen a double bottom of support show-up around 5633. Breaks-below can open the door for short-side breakout entries.
--- Written by James Stanley, Strategist for DailyFX.com
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