The shorter trading week brought a minor dip in volatility, as currency markets mostly ranged after explosive breakouts earlier this month. Equity markets recovered, triggering a risk-off positioning that led to a minor recovery in the US dollar and a slight cooldown for gold after a historic $3,500-per-ounce level was reached on Tuesday.
The European PMI delivered underwhelming results, helping the US dollar recover. Meanwhile, Canadian retail sales surprised to the upside ahead of the federal elections that will kick off the week ahead, likely causing higher volatility for CAD pairs.
Australian CPI and Japanese interest rates will dominate Asian currency news this week, particularly the latter. The Bank of Japan is expected to hold interest rates steady at 0.50%. The latest CPI print for the yen, which came in at 2.2% instead of the 2.4% forecast, tends to support the rate-hold thesis. However, any remark by Governor Kazuo Ueda about further rate hikes could trigger a yen rally, especially given the connection to tariff-influenced inflation.
Finally, Friday’s Non-Farm Payroll news will deliver the latest snapshot of the employment market situation. Analysts expect a mild addition of 129,000 jobs in April, accompanied by a steady unemployment rate of 4.2%.
Key News:
- Monday: CAD – Federal Election
- Tuesday: USD – JOLTS Job Openings
- Wednesday: AUD – CPI, USD – GDP m/m, ADP Employment, Core PCE Price Index
- Thursday: JPY – BOJ Interest Rate, USD – Unemployment Claims, ISM Manufacturing PMI
- Friday: USD – NFP, Unemployment
- Saturday: AUD – Federal Election
Pairs In Focus
1.GBP AUD
After a big rally early in the month, GBP/AUD has pulled back, spending over two weeks between 2.07 and 2.095. However, this large base will eventually break, potentially triggering a move of 250+ pips.
GBP/AUD 4-hour chart, Source: TradingView
The long-term trend is bullish, and retail traders are overwhelmingly short, at around 80%. Still, to get bullish in the short term, the price would first have to break and close above 2.09570 on the daily chart, opening the doors to a move to 2.12 or beyond. A valid breakout should be accompanied by rising volume, although, due to its decentralized nature, forex volume can be challenging to estimate accurately.
2. AUD/CAD
This setup is not for the faint of heart, as both countries will face general elections within the week, and the outcome of either could notably influence the markets. However, this pair has ranged over the last week, failing to break the overhead resistance around 0.88760. As long as the price stays below that level, there is a higher probability of downside, with a potential short-term target of 0.87260.
AUD/CAD Daily chart, Source: TradingView
Notes:
- AUD/NZD: Rallied late in the week but remains in a bearish trend.
- AUD/SGD: It remains in consolidation, but if it cannot recapture the 0.84900 level, it will likely turn down again.
- AUD/JPY: Advanced higher like many other pairs against the yen. It hit the overhead resistance around 92, which remains the level to overcome.
- AUD/CHF: Moved higher but remains in an overall bearish trend.
- CAD/JPY: Broke out higher, but it has to take out March’s high to reverse a long-term bearish trend.
- CHF JPY: It staged a late-week rally. If it can push through 174.08, it can move higher to challenge the early-month highs.
- EUR/AUD: Failed to break to the downside, raising the odds of an upside move to challenge resistance at 1.80.
- EUR JPY: It advanced higher but remains in the long-term range with resistance at 163.850.
- EUR NZD: Failed to break through a key level and found support around 1.89300.
- GBP/JPY: Moved higher as anticipated, but too late in the week to take action. It is close to a key level of 191.900, which it needs to overcome to move higher.
- GBP NZD: Found support around 2.22 and could move higher to challenge resistance around 2.25.
- NZD/JPY: Broke above 84.780 owing to the yen’s weakness. Further expansion to the upside could bring it closer to 87.40.
Disclaimer: Any opinions expressed in this article are not to be considered investment advice and are solely those of the authors. Singapore Forex Club is not responsible for any financial decisions based on this article’s contents. Readers may use this data for information and educational purposes only.
