Traders Hoping for USD Weakness this Tuesday
USDJPY Forecast | Potential Retracement to Moving Averages
USDJPY is once again moving sideways, with price bouncing back and forth between 108.50 and the 109.00 major psychological resistance levels. The overall uptrend is still intact, with price gearing up to break outside of the tight range.
Stochastic is hinting at an upside break, as the oscillator is moving out of the oversold zone and reflecting a return in buying pressure. MACD, on the other hand, is still reflecting a possible drop. In this case, USDJPY might make a much needed correction, possibly until the 100 simple moving average near the 108.00 major psychological support.
Take note that the 100 SMA is still moving above the 200 SMA, which means that the overall uptrend could stay intact. A break past the 109.00 levels could lead to a test of the next resistance zone at the 110.00 major psychological level.
On the other hand, a break below the SMAs could be a sign of a market reversal. The next support zone is located near the 105.00 to 106.00 levels and another break below this region could take price down to 101.00 eventually. However, the path of least resistance for this pair is to the upside, as fundamentals favor the US dollar.
USDCAD Forecast | Head and Shoulders Pattern
USDCAD has formed a short-term head and shoulders pattern, indicating that a selloff might be in the cards. The pattern is roughly 200 pips in height, which suggests that the resulting drop could be of the same size.
Stochastic is suggesting a bounce for now though, as the oscillator is moving out of the oversold region and reflecting a return of buyers. This could take USDCAD back to its previous highs near the 1.1100 major psychological level. Similarly, MACD is suggesting that the selling pressure may be starting to weaken.
The moving averages are cruising sideways for now, with the 100 SMA possibly getting ready to break below the 200 SMA and reflect a downtrend. In this case, USDCAD might be able to break below the neckline support around 1.0900-1.0950 and confirm the potential selloff to the 1.0700 levels.
Take note though that price is also stalling at a resistance turned support area, which might keep any losses in check. This has held as an area of interest in the past month and may continue to do so for now. With that, the pair could have a stronger chance at rebounding back to the previous highs than breaking below the current support.
NZDUSD Forecast | Selloff Overdone, Retracement Due?
NZDUSD has been on a massive downtrend in the past few months, as price has fallen from the .8800 major psychological resistance all the way down to its .8100 levels for now. Price appears to be headed towards the .8000 support zone, which could hold as a floor for any declines.
With this steady drop, a huge market correction may be overdue, as the MACD has been hinting that the move is overdone. With that, price could pull up to the 100 SMA, which has held as dynamic resistance so far. A higher retracement could lead to a test of the 200 SMA, which is near the .8300 major psychological resistance.
Stochastic is reflecting a pickup in buying momentum, as the indicator has moved out of the oversold region and is making its way to the overbought area. Once this technical indicator crosses down from the overbought zone though, the ongoing downtrend might resume and take NZDUSD to new lows.
A strong return in selling pressure might even lead to a break of the .8000 support zone and perhaps more losses for NZDUSD. A short-term bounce at the .8000 major psychological area could be seen though as traders might book some profits off their short Kiwi positions at that level.