It’s been a challenging week for our forex strategies as first-tier catalysts brought choppy conditions into the latter half of the week, with most markets closing close to where they started.
USD/CAD: Monday to June 26, 2023
Forex USD/CAD for 2 hours Planned by TV
With inflation updates expected in the US and Canada this week, we spotted an attractive technical setup for USD/CAD price action. We thought a retest of the lower end of the descending channel might attract potential bulls in the short term if our expectations come through as discussed in our event guide for a weak Canadian CPI update.
The market had already reached the weekly S1 pivot area during the London session before the CPI update, and it seemed like the Canadian dollar sellers were already waiting to make their move.
The pair quickly rebounded to the upside and traders are likely to be short ahead of the CPI update, which did not disappoint the CAD bears as the monthly CPI reading for both Headlines and Fundamentals came in below expectations and prior readings.
The dollar bulls are also likely to play a role US dollars / Canadian dollars The strength as well as a series of US economic updates on Tuesday indicated lower odds of a recession in the US, which led to a strong move in the US dollar.
It topped the rally in the Wednesday session, where it has been choppy ever since thanks to more first-class updates in the US.
Overall, this discussion has been very effective as the current rate is well above the target support area and carryover rate.
Canadian dollar / Japanese yen: Tuesday – June 27, 2023
Canadian dollar / Japanese yen in the two-hour forex Planned by TV
We’ve explored another possible way to play the potential rise in volatility in the Canadian dollar as Canada prepares to release its latest consumer price inflation update.
With the potential for volatility rapidly increasing for the Canadian dollar, we thought the consolidation pattern on CAD/JPY was a setup to watch, especially for a break-down if Canadian inflation data comes in below expectations.
As mentioned earlier, Canada reported that both headline and core inflation rates were slowing more than expected and previously, which triggered a quick selling reaction in the Canadian dollar.
But unfortunately for the CAD/JPY bears, risk sentiment was in a positive mood during the session thanks to strong economic updates in the US, capping the initial rally and reversing it lower.
Bears were still thinking Canadian dollar / Japanese yen They seized it as another selling opportunity, holding the 109.20 area and reversing the rebound to push the market back around 108.70 before the bulls consolidated their gains.
CAD/JPY remained choppy for the rest of the week, ebb and flow with broad market volatility and bias, ultimately landing this strategy discussion slightly positively against the price post (around 109.30) ahead of the weekend.
Australian Dollar / Japanese Yen: Wednesday – June 28, 2023
AUD/JPY for one hour Planned by TV
AUD/JPY made it onto the watch list on Wednesday with a typical technical setup forming as volatility ran through the pair. The Australian dollar was the main driver of the movement after the recent CPI reading from Australia, which we thought could have a sustained impact on the pair in the short term.
A bearish setup to watch was to see if the market breaks below the descending triangle pattern that has formed on the 1-hour chart, which is a possible price scenario based on the notion that this week’s weak Australian CPI reading makes the additional argument that the RBA has Holds up. to raise interest rates again at their next meeting in July.
Since the technical indicators were mixed at the time, we also discussed the possibility of a bounce as the oversold stochastic signals and key support area could attract buyers, but with a possible price cap around the bearish ‘highs’ pattern.
We saw a bearish break of support during the Wednesday session, but the pair turned around during the next Asian session, linked to better-than-expected Australian and Japanese retail sales data updates.
Also, recession fears due to tightening global monetary policy seem to be easing, and the general reaction to hawkish comments from the European Central Bank’s Forum on Central Banking on Wednesday has been somewhat muted.
With risk sentiment turning positive for the rest of the week, it appears that this strategy discussion did not work out as expected for the bears as they lost a bearish “highs” pattern to the bulls on Friday, giving Australian dollar / Japanese yen Slight gains for buyers on the week’s high.
British Pound / Australian Dollar: Thursday – June 29, 2023
GBP/AUD 30-minute forex Planned by TV
On Thursday, we spotted a strong technical argument in the GBP/AUD as a combination of Fibonacci levels, an oversold signal, and a broken resistance area has the potential to attract buyers to the existing bullish trend.
This made sense from a fundamental standpoint with the recent weaker-than-expected Australian CPI changing the fundamental picture less optimistic, and the prevailing view that the BoE needed to remain aggressive with rate hikes to combat persistent higher inflation conditions.
But we also saw the potential for the upcoming round of PMI readings from China to cause volatility and a bullish reaction for the Aussie, so we kept an open mind on the possibility of a break-down to the upside as well.
As noted in the above summary of the AUD/JPY currency pair, the positive Australian updates and the general risk sentiment shift towards positive sentiment shifted to the Aussie in the early Thursday Asian session.
The China PMI update came out mixed as the service sector continues to expand against contractionary conditions in manufacturing, which appears to correlate with a quick move lower on the pair.
Total, British pound / Australian dollar It was very choppy after our original discussion, and still trading around Fibonacci and moving averages heading into the weekend. This consolidation may continue into the next week, as we are likely to see the next real move in the pair after the latest RBA monetary policy statement on July 4th. Follow us!
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