Aussie Surge vs. Pound, Dollar on Tap
EURJPY Correction to 140.00 | Potential Reversal Signal
The dovish ECB rate statement sparked a round of euro selling in recent trading, even against the weak Japanese yen. EURJPY found resistance at the 144.00 major psychological level and may be in for more losses, as traders work in the ECB’s commitment to further easing and shoring up its balance sheet.
The pair may be on its way south, possibly until the previous highs at the 140.00 major psychological level, which coincides with a Fibonacci retracement level. A bounce from this area could take EURJPY back to its previous highs at 144.00 and beyond.
On the other hand, a strong break and continuous move below 140.00 might confirm that further losses are in the cards for this EURJPY pair. This could lead to long-term selloff until the next key support around the 136.00 major psychological handle.
There are no major reports due from the euro zone and Japan today, which indicates that consolidation is also possible. After all, both the ECB and BOJ are very dovish central banks and both have implemented additional easing so far this year. With that, sideways movement between support around 142.00 to resistance at 144.00 is also a possibility.
GBPAUD Retracement to 1.8400 | Short-term Uptrend Momentum
GBPAUD has recently broken past resistance at the 1.8400 major psychological level but may be due for a pullback soon. After all, the BOE meeting turned out dovish as expected, although the RBA statement hasn’t been very upbeat as well. This could lead to a bit of weakness for the currency pair, as the BOE might postpone its target rate hike next year.
The 1.8400 handle lines up with the 50% Fibonacci retracement level and potential support. This is also close to a rising trend line connecting the recent lows of price action that’s just forming on the shorter-term time frames.
A break below this area might confirm that the uptrend is turning and that a reversal might take place. This could depend on the tone of the BOE meeting minutes set to be released later on, as there are no major catalysts lined up from both Australia and the UK for the time being.
A bounce, on the other hand, could take GBPAUD back to its previous highs near the 1.8650 minor psychological level. Stronger buying momentum and weak reports from Australia might lead to a break past this area and new highs for the GBPAUD pair.
USDCHF Testing .9700 Resistance | Potential Breakout Setup
USDCHF has seen such as strong rally yesterday that buying momentum might carry on past the resistance at the .9700 levels. This area coincides with the top of a rising channel forming on the 1-hour time frame but it appears that there’s enough room for the pair to head further north.
If not though, USDCHF could fall back to the bottom of the ascending trend channel around the .9650 minor psychological level. Mid-channel area of interest could also hold around the .9700 major psychological handle, which might hold as a near-term floor and trigger another test of the .9700 levels.
Market catalysts for this move include the NFP release later today, as the US economy is expected to post another strong jobs showing for the month of October. This could revive talks of an FOMC rate hike early next year while weak data could dash hopes of tightening and lead to a dollar selloff.
Other reports that could move this pair include Swtizerland’s release of its retail sales, unemployment rate, and foreign currency reserves data. Better than expected figures could provide support for the franc in the short-term but the path of least resistance for this pair is still to the upside.