USD Expectations Pre-FOMC & NFP

Hello Forex Traders,

The trading year of 2014 started off with a USD strength bang, which was the total opposite of how the 2013 trading ended. Is this just a dip and a retracement for more USD weakness OR is this the start of a bigger reversal and more upside on the USD?

FIREWORKS IN 1ST WEEK OF 2014

Nobody really knows, but without any doubts this week’s news announcement will most likely have their fair share of influence on this answer. Here is a summary of the news events:

MONDAY: USD ISM
WEDNESDAY:  USD ADP & FOMC MEETING MINUTES
THURSDAY:  GBP & EUR ECB BID RATE & PRESS CONFERENCE
USD UNEMPLOYMENT CLAIMS
FRIDAY:  USD NFP & UNEMPLOYMENT RATE

FOMC and NFP in 1 week will certainly give the New Year an interesting start! The big question is the jobs numbers, which will shed light how much and how fast the process tapering might be able to continue. Of course the FOMC statement will show the meeting minutes of December, which was the meeting where the first light version of tapering was introduced. Patience might be needed this week.

CABLE UPTREND?

The GBPUSD is moving neatly in the uptrend channel (blue) ever since the summer of 2013. Therefore the current downwards price movement could still be a retracement for more upside. The broken resistances (green and purple) could provide that support as well.

6- 1- 2014 gu d

From a weekly perspective price was able to break above the triangle (purple) but was not able to continue this march forward when price approached a big weekly top at 1.6750 (brown line) and the -27.2% Fib target (green). Two weekly candle wicks on the top are now visible as well.

However, the broken resistances (purple and green) could give ample reason for the Cable to bounce for more upside and retest the target and resistance (brown) one more time. A break below those levels could mean a fall down to the Fibs (green) at 23.6%, 38.2%, 50% – or even a retest of the triangle bottom (lower purple).

6- 1- 2014 gu w

USDJPY PAUSE?

The USDJPY has been trending up nicely but the last week has seen some hesitation with continuation. Price is now back at the bottom of the uptrend channel (blue) and could be a bouncing spot for more upside.

If price were to break through the channel, then horizontal support levels will be of major importance and a continuation of the uptrend at one of these levels seems likely at the moment.

The target is confluence of the next resistance (zone) and weekly Fib target (green) at 111.

6- 1- 2014 uj

EURUSD RESISTANCE

The EURUSD attempted to push through the heavy loaded resistance lines (orange, magenta, red) but eventually did not manage and fell from the 1.3890 high down to 1.3580. Price is now at the bottom of a daily/weekly uptrend channel (light purple), which means it is at a bounce (up) or break (down) spot.

6- 1- 2014 eu

Which currency pairs do you find interesting this upcoming week? Write down your favorites here below!! And we will take a look at those in this week’s articles.

Thanks for reading this article and for sharing it with others. Wish you Good Trading in 2014!!

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