Dollar Slump in Action; Nike Surge Hopeful
USDCHF Support at .9600 | Uptrend Retracement Play
USDCHF has recently paused from its climb to retreat to an area of interest at the .9600 major psychological level. This lines up with a broken resistance zone and the rising trend line visible on its 1-hour forex chart.
If price bounces off this support region, the climb could resume and take USDCHF up to its previous highs around the .9800 major psychological resistance. Stronger buying momentum might even lead to an upside break all the way up to the next ceiling at the .9900 major psychological level.
Event risks for this trade include the FOMC statement on Wednesday, which might include hawkish remarks from the Fed. After all, the US economy has shown consistent improvements, particularly in the labor and consumer sectors. However, inflationary pressures have remained weak and this might be enough reason for the Fed to stick to its cautious stance.
Downbeat remarks from the Fed, combined with weaker than expected inflation readings and forecasts, could be a recipe for disaster for the dollar. This might lead to a downside break of support at .9600 for USDCHF and a move down to the next floor around the .9500 levels.
GBPUSD 150-Pip Range | Support at 1.5600
GBPUSD has been moving sideways recently, finding support at the 1.5600 major psychological level and resistance at the 1.5750 minor psychological mark and creating a 150-pip range since mid-November. Price has just bounced off support t the 1.5600 handle and may be due for a test of resistance.
Stochastic is moving up, indicating that there may be a bit of buying pressure left to trigger a test of the 1.5750 resistance. However, if pound bears gain momentum, they could push the price below the bottom of the range and the previous spike lower to 1.5550.
Event risks for this trade include the UK CPI release today, as weaker price pressures would remind traders that the BOE is not looking to hike rates anytime soon. The headline CPI is slated to fall from 1.3% to 1.2% while the core CPI could hold steady at 1.5%, far below the central bank’s 2% inflation target.
Stronger than expected data, on the other hand, could revive talks of a rate hike from the BOE and push pound pairs higher. This might lead to an upside break of resistance, which would mean further gains for the pair. The rally might last by as much as 150 pips, which is the same size as the rectangle chart pattern.
Retracement on Nike Stocks | Pullback to $94/Share
Nike shares have retreated from its recent climb after topping out close to $100/share. This could be indicative of a long-term market correction before the stock resumes its rally back to the previous highs and beyond.
US equities have recently returned some of their recent wins as risk aversion took hold of the markets in the wake of falling commodity prices and rising geopolitical tension. Apart from that, the prospect of Fed tightening early next year could make business investment more expensive, making it costly for companies to expand operations.
With that, price action on Nike shares could hinge upon the FOMC statement this week, wherein the Fed is expected to drop more hints on when they might hike interest rates. Hawkish remarks could lead to more weakness for equities while cautious comments could revive the rallies.
Nike shares could pull back to the $94/share level, which is in line with an area of interest, before resuming their climb. A deeper pullback could last until the $90/share level, which lines up with a broken resistance zone.