Pound Weakness May Turn Out to Dominate Market Sentiment
GBPUSD Larger Pullback | Retracement or Reversal
GBPUSD doesn’t look ready to head lower anytime soon, as the pair faked a break below consolidation then popped back higher. This could be a sign that bulls are refusing to let price drop for now, as support was found near the 1.6200 major psychological level.
With that, the buying momentum could take price up to the next Fibonacci retracement level, which is near the 1.6350 minor psychological mark. A higher pullback could lead to a test of the 1.6400 major psychological resistance, which is near the 61.8% Fibonacci retracement level.
Stochastic is still indicating the presence of buying pressure, as the oscillator hasn’t quite reached the overbought zone yet. This could mean more short-term gains for the pair, with the nearby Fib levels acting as potential resistance. Bear in mind that GBPUSD has yet to fill the price gap from the other week.
A break past the 1.6400 handle could mean a reversal for this pair, as GBPUSD could draw more demand until the 1.6500-1.6600 area of interest. On the other hand, a return in selling pressure could see the pair at the previous lows near the 1.6100 major psychological level or perhaps until the 1.6000 mark.
AUDJPY Fibonacci Retracement Level Bounce | Support near 96.00 Level
AUDJPY’s short-term selloff appears to have hit a floor, as the pair bounced off support near the 96.50 minor psychological level. Stochastic is climbing, indicating that there’s enough momentum to lead to more gains for this pair.
However, if Aussie bears hop in, AUDJPY might be in for another test of the area of interest, which is close to the 96.00 major psychological level. Once stochastic reaches the overbought zone, it might be difficult for buyers to push the pair further north, thus opening the possibility of a deeper retracement.
In that case, a pullback to the 61.8% Fibonacci retracement level might still be possible, and this would mark the line in the sand for any drops. A break below the lowest Fib level might be a sign that a market reversal is starting.
On the other hand, a sustained bounce could take AUDJPY up to its previous highs past the 98.50 minor psychological resistance. Stronger demand might even lead to the formation of new highs, possibly until the 99.00 mark or all the way up to the 100.00 major psychological level.
EURCHF Nearing 1.2000 SNB Floor | Potential Intervention to Boost EURCHF
EURCHF has been on a steady decline ever since the ECB decided to cut interest rates in a couple of instances this year. This has led to speculations of action from the SNB, as the Swiss central bank might also have some easing measures of its own in order to keep the franc’s gains limited.
Recall that the SNB implemented a floor on EURCHF to prevent the franc from appreciating further. This has been set in 2011 and reaffirmed in 2012, although the SNB has resorted mostly to jawboning afterwards to defend the peg. The upcoming SNB statement could mean negative deposit rates from the central bank or actual currency intervention in order to boost EURCHF.
With that, the pair isn’t likely to go much further below the 1.2000 handle anytime soon. EURCHF is currently stalling at the 1.2100 mark and might be due for a strong bounce if the SNB announces easing or intervention this week.
In the previous intervention, price gained by close to 200 pips and might happen again this time. This was followed by a stronger move up to the 1.2500 handle in later months, levels that the SNB might want to see again for EURCHF.