USDJPY Set to Surge Sooner Rather than Later
USDJPY To Test 117.00? | Rising Channel Resistance
USDJPY is still moving inside the rising trend channel visible on its shorter-term time frames, as the uptrend remains intact. Price recently bounced off the support around the 115.50 minor psychological level after the latest GDP release from Japan revealed that the company slumped back in recession for Q3 2014.
News that this could delay the next tax hike led to yen support, yet traders jumped back in selling mode as price tested the area of interest. With the pickup in bullish momentum, USDJPY is now on its way to test the previous highs around the 117.00 levels.
If this holds as resistance, USDJPY might make another move back to channel support, this time around the 116.00 area. However, the path of least resistance is to the upside as markets are expecting more dovish remarks from the BOJ and possibly another boost to their easing efforts.
An upside break from the channel resistance might mean a move until the 120.00 major psychological level, which is an area that many traders are targeting for the year. On the other hand, a downside break from channel support could mean a sharper correction to the next area of interest at the 114.00 levels.
NZDUSD Reversal Pattern | Bottoming Out at Yearly Lows
NZDUSD could be in for more gains from here, as the pair appears to have reached a bottom on its longer-term time frames. On its daily chart, it can be seen that the pair found support at the previous year lows around the .7700 major psychological level.
A double bottom pattern can be seen, as price found a neckline around the .8000 major psychological resistance. A break past this area could mean as much as 300 pips in gains to .8300, which is the same height as the reversal chart formation.
On the other hand, if the .8000 mark holds as strong resistance, NZDUSD could make its way back to .7700 or lower if selling pressure is strong enough. Just recently Finance Minister Bill English said that the pair is already trading around sustainable levels, hinting that RBNZ intervention might no longer be necessary.
Data from New Zealand has also shown strong improvement, with the retail sales and employment data beating forecasts for the third quarter of the year. English also mentioned that inflation could pick up sooner or later, which would lower the odds of easing from the RBNZ.
EURGBP Double Bottom Formation | Upside Break from .8050
This pair has been on a steady downtrend for most of the year but it looks like the losses are over now that a double bottom reversal pattern can be seen on its long-term charts. Price has yet to break past the neckline around the .8050 minor psychological resistance before confirming the potential uptrend though.
If the pair fails to make a move past .8050, the pair could stay stuck in its range between support at .7750 and resistance at .8050. An upside break could lead to as much as 300 pips in gains, which is the same height as the chart pattern.
Event risks for this trade include the UK CPI release and the euro zone ZEW figures, with weak inflation readings expected and a strong comeback in confidence from the euro zone. In that case, EURGBP has a chance at breaking higher, as traders could price in a delay in BOE tightening and a pause in ECB easing.
Recall that the recent shift in BOE stance to a more dovish bias led to massive pound losses, as weak inflation pressures might convince policymakers to sit on their hands for much longer.