Fan Yang
All posts from Fan Yang
Fan Yang in Fan Yang,

Forex Recap - USD-Strength Holds Back

The week ended with the market holding back USD strength, which was boosted by Wednesday's FOMC statement.

EUR/USD is in near-term consolidation after breaking a rising support from February. However, the bearish swing alone is only indicative of the market turning from bullish to maybe sideways. In this scenario, it is still viable to buy this dip as it found support around a previous resistance. 

(EUR/USD 4H Chart)

If you believe the FOMC statement should give USD further strength. Then if it probably better to fade a rally this coming week. I would still be conservative with the bearish outlook with target first to 1.3680-1.37, then to 1.3560 in the short-term.

GBP/USD drifted slightly lower than Thursday's price action, but is is showing a slowdown to the FOMC-induced decline. Cable is testing some support factors, including 61.8% retracement, and a couple of rising trendline, one going back to Nov, the other back to July of 2013.

USD/JPY held back as well right after the FOMC statement based USD-push. The 4H chart shows that USD/JPY is in a sideways market, and before February, a bearish one in January. But going back to 2012, USD/JPY has been bullish. Therefore, I see a slight bullish bias here. The February-March action so far may reflect the accumulation phase. I am looking for bullish participation this coming week.

(USD/JPY4H Chart)

The central bank policies Fed. vs. BoJ are divergent and favor the USD. I am looking for the pair to challenge its 2014 high in the medium term. 

AUD/USD and NZD/USD both bounced back against USD-strength, Aussie being the more aggressive one, but the kiwi being the one with a stronger prevailing uptrend. 

(Left: AUD/USD, Right: NZD/USD; both 4H charts)

AUD/USD is at the crossroad, appearing to be in a bottom attempt. NZD/USD is bullish, but is challenging a triangle resistance seen in the weekly chart.

XAU/USD (gold) tested the 2014 rising channel support yesterday. The market has been showing respect to this bullish factor, and put in a near-term bottom at the trendline. Let's see if it can build on top of that bottom and continue trading up gold as it has throughout 2014 so far.

In the near-term, watch for resistance if the market does come up to the 1350-1355 area.

The loonie saw some strength at the end of the week, and weighed on the USD/CAD, which had a bullish break above a triangle. This could be setting up for a buy-on-a-throwback-after-a-breakout type of trade.

The retreat of USD-strength is not enough to say that the FOMC-reaction was a fake out. I am looking for continuation of this USD-strength next week, albeit not in as strong a manner as it was this past Wednesday after the FOMC statement.