Forex Outlook: EURUSD, USDJPY, NZDJPY, GBPUSD

EURUSD: Euro stable with eyes on parity again

(Vasilis Tsaprounis – TopFX)

After a stunning Friday the single European currency is holding on to its gains and now has its sights set on the 1/1 level again.

Once again the European currency showed its strong resistance and the ability to react quickly and strongly after the pressures it receives.

In the wake of the US jobs announcement on Friday, the European currency temporarily came under some slight pressure but then responded with a strong reaction of almost 200 basis points taking the exchange rate above the 0,99 level.

As aggressive rhetoric from the Fed’s side shows signs of fatigue while European Central Bank President Christine Lagarde seems willing to hold on to rate hikes until inflation returns to 2% the single currency appears to be finding significant support.

The market has indeed confirmed that it has largely digested all the negative data weighing on the European currency and any small positive diversification works in favor of the Euro very fast.

While the restoration of some positive climate in the international stock markets worked in its turn to support the European currency as the need to buy dollars as a safe haven currency was limited once again.

The morning announcement on the course of industrial production in the German economy unexpectedly showed signs of an improvement, in turn, appears to strengthen the European currency. For the rest of the day, the calendar is limited to the speech of ECB’s President Christine Lagarde and then corresponding speeches from Fed officials.

As we have mentioned repeatedly the latest move did not surprise us as it reaffirmed our basic strategy of buying the euro on every dip.

After making gains from the latest euro rally I would maintain a wait-and-see attitude for the rest of the day.

USDJPY Outlook: Dollar keeps weak tone, boosting fears of a reversal

(Slobodan Drvenica – Windsor Brokers)

The dollar turns to red in early Europe after initial gains in Asia on Monday and probes again through cracked Fibo support at 146.85 (23.6% of 130.39/151.94 ascend).

Renewed risk sentiment keeps the dollar under pressure, as traders focus on the US mid-term elections and prepare for the likely scenario in which Republicans would take control of Congress and possibly the Senate which would result in a split government.

The risk appetite is likely to remain, according to the scenario of potential political gridlock, as markets performed positively after the previous mid-term elections.

Fresh weakness broke again below the trendline support of a larger bull channel that raises fears of reversal.

Repeated close below Fibo support at 146.85 to generate an initial bullish signal, with extension and break below 145.10 pivots (Oct 27 trough) to boost the negative signal on completion of failure swing pattern on the daily chart. Daily Tenkan-sen and Kijun-sen turned to a bearish setup and the structure is weakening on rising negative momentum, adding to signals that the near-term focus is shifting lower.

Repeated close below broken daily Kijun-sen (147.73) to keep bearish stance intact.

Res: 147.10; 147.73; 148.52; 148.84.
Sup: 146.55; 145.67; 145.10; 143.71.

NZDJPY’s bullish trend continues today

(Nenad Kerkez – Top-XE)

NZDJPY technical analysis

• Huge V-shaped reversal.
• MEGATREND’s jaws are up and open.
• Strongly bullish.
• 87.27 and 88.00 are TPs.

MEGATREND MAs: Bullish

D1 chart NZDJPY

1. Point 1 V-shaped reversal.

2. Double bottom.

3. Bullish jaws and angle of the MAs.

4. Entry zone.

5. Final TP.

The NZD/JPY has had 112 pips of ATR for the last 14 days. It indicates greater volatility and the possibility to make good pips on bullish trends. The trend is strongly bullish and we can see that the MAs are very clear with that. MEGATREND MAs are pointing up, the angle is very obvious and the momentum is very strong. Adding to this is a bullish fake-out pattern + strong momentum candle which is a screaming buy.

It’s the NFP Monday and the JPY should be moving lower. Adding to it, the NZD is also strong. V-shaped reversal points to 87.27 and 88.00. The entry is a rejection of the upper MA and the breakout of the previous high. Marubozu candle was formed on Friday. It also is a fakeout bullish pattern so we have a bullish confluence. Today’s ATR target should be hit.

This analysis, all the patterns, and all entry signals and targets are a part of the Megatrend system and a trading course. I am currently running 2 long positions in the NZD/JPY as I am bullish on this market. My Telegram group recently received 2 long signals on NZD/JPY… The daily timeframe is clear and concise.

GBPUSD Forecast: Pound Sterling eyes 1.1500 after overcoming key hurdles

(Eren Sengezer – FXStreet)

– GBPUSD registered strong gains at the beginning of the week.

– Broad-based US Dollar (USD) weakness is fueling the pair’s advance on Monday.

– Next resistance aligns at 1.1500 as the technical outlook points to a buildup of bullish momentum.

GBPUSD has managed to build on Friday’s recovery gains and climbed above 1.1400 despite having started the week with a bearish gap. The short-term technical outlook suggests that the pair is gathering bullish momentum and that it could test 1.1500 next.

Following Thursday’s heavy selloff that was triggered by the Bank of England’s (BoE) dovish tone, the Pound Sterling (GBP) benefited from risk flows ahead of the weekend. The market mood remains slightly positive early Monday with the US stock index futures rising between 0.4% and 0.5%.

If risk flows continue to dominate the financial markets in the second half of the day, the US Dollar (USD) is likely to have a hard time finding demand as a safe haven.

Over the weekend, The Guardian reported that British Finance Minister Jeremy Hunt was planning to announce 60 billion Pounds of tax rises and at least 35 billion Pounds of spending cuts. The BoE said that they have not taken potential austerity measures or tax increases into account when deciding on the policy action. Hence, the BoE’s dovish stance could be reaffirmed in case the UK government decides to run a tighter fiscal policy. Nevertheless, the USD’s market valuation is likely to continue to drive GBPUSD’s movements in the near term.

There won’t be any high-tier data releases from the United States (US) in the second half of the day and investors are likely to stay focused on the risk perception.

GBPUSD Technical Analysis

GBPUSD faces immediate resistance at 1.1460, where the 50-period Simple Moving Average (SMA) on the four-hour chart is located. The pair retreated slightly after having tested this hurdle earlier in the session, suggesting that additional gains are likely once that level is confirmed as support. On the upside, 1.1500 (psychological level, static level) aligns as the next bullish target ahead of 1.1550 (static level).

1.1400 (psychological level) aligns as the first support before 1.1375 (100-period SMA). Only a four-hour close above the latter could be seen as a convincing bearish development and pave the way for an extended slide toward 1.1300 (psychological level, static level).

Read FX Daily: Two big risk events this week