Currencies:
The dollar has broken out to the upside, which is nice to see after a lot of back and forth over the last 2 months. We will be looking for any pullback to take this long. The JPY is reacting from our AOI where we are anticipating a move up from here. There are some setups forming on XXXJPY for shorts. If we do fall through this AOI on the JPYBasket (so XXXJPY pushing up), then we can simply look for shorts on the basket after seeing the breakout.
Federal Reserve officials signalled on Wednesday that they were on track to raise interest rates in March, given that inflation has been running far above policymakers’ target and that labour market data suggests employees are in short supply. “I would say that the committee is of a mind to raise the federal funds rate at the March meeting, assuming that the conditions are appropriate for doing so” (Powell comments, NYTimes)
How this affects the market is whether the market sees this as risk on or risk off. If you want to know more about what this is, this gives a good summary: https://tinyurl.com/5asz45d4
You can also find information on what safe-haven currencies are here as well: https://tinyurl.com/yc87tfr8
Upcoming fundamental releases we have are:
Thursday, January 27th
- USD, Durable Goods Orders (Dec)
- USD, Gross Domestic Product Annualized(Q4) PREL
- USD, Nondefense Capital Goods Orders ex Aircraft (Dec)
Friday, January 28th
- EUR, Gross Domestic Product (QoQ) (Q4) PREL
Monday, January 31st
- EUR, Gross Domestic Product s.a. (QoQ) (Q4) PREL
- EUR, Gross Domestic Product s.a. (YoY) (Q4) PREL
- EUR, Harmonized Index of Consumer Prices (YoY)(Jan) PREL
USDollar Daily
JPYBasket 4HR
Recap: Potential Setup – EURUSD
EURUSD (posted in the previous blog post)
EURUSD
Last week we were watching EURUSD for a long position. However, we failed to react from the area of interest and therefore we did not form an entry.
This shows why its critical to wait for price to confirm we are reacting from the AOI!
Potential Setup – GBPJPY
GBPJPY 1HR
GBPJPY 4HR
We are watching GBPJPY for a short, which is in line with our JPY bias. Either you can wait for a base to form where we are right now, or you can wait for the hourly to breakout to the downside and get in on that pullback. Either way, we will be targeting 152.18.
If the JPYBasket falls through the AOI then we will no longer be looking for shorts on this.
Written by Aqil – Head Analyst