News summary:
AUD – Unemployment up 0.2%. RBA said more action is needed to bring AUD down to its fair value.
JPY – BoJ said there's no need for further stimulus at the moment.
GBP – Mark Carney said that BoE is comfortable with low inflation and the next interest rate move will be up, not down.
EUR – Greece was given 6 months to come up with ways of meeting interest payment on loans.
Upcoming news:
AUD – Monetary Policy Meeting Minutes (Tuesday)
JPY – Monetary Policy Statement (Wednesday)
GBP – Votes on interest rate (Wednesday)
USD – FOMC (Wednesday)
AUDUSD
Fundamental:
Fundamentals remain bearish as Australia is adjusting to the drop in commodities prices which makes up the majority of the country's income. Market is also pricing in another rate cut from the RBA next month and traders will look for confirmation of this prediction in this week's Monetary Policy Meeting minutes.
Technical:
While the overall trend is bearish, it is worthwhile to note that price have been ranging between 0.7880 and 0.7630 for 2 weeks. This is the third time the pair has been ranging since its fall from 0.9400 in September last year. I noticed a pattern of a double bottom and higher high during the ranging phase before continuation of the down trend. So, if price retests the high 0.7875 from 6/2/2015 then I will observe price action on 1 hour chart for signs to short again. It's not a textbook pattern but it's one that price is showing me.
GBPAUD
Fundamental:
Moderately bullish if you believe what Mark Carney said about Bank of England's acceptance of low inflation and that their next interest rate move would up and not down. Otherwise slightly bullish as I have said last week.
Technical:
The ascending triangle pattern on 4 hour chart that I identified last week indeed provided the break out that I was looking for but price didn't retrace enough to hit my buy limit orders at 1.9680 (it was 33 pips too low). Just come to show that even if you get it right it doesn't mean that you can profit from it. Right now, the preferred trading direction is up with the daily trend. I can see resistance at 2.0250. If price comes down to 1.9720 area I will look for signs of strong buying on 4 hour charts to go long.
EURUSD
Fundamental:
Overall bearish but it see temporary signs of bullish sentiment with Greece being given 6 months to sort out its debt repayments.
Technical:
Since its low of 1.1096 on 26/1/2015, price has been been testing the 1.1500 resistance multiple times in the last 2 weeks. A higher low of 1.1269 on 9/2/2015 is in place and now if price can close above 1.1500 on daily chart we would have a second higher high which I think is significant because 2 higher highs and higher lows on the daily chart could lead to a short term rally to test the next high at 1.1679 on 21/1/2015.
GBPUSD
Fundamental:
Despite what Mark Carney said last week, my view on the fundamentals of this pair remain bearish. Inflation is a measure of increased earnings and with such a low inflation rate despite the
£375 billions asset purchase program I am skeptical that a rate increase should be on the table.
Technical:
This pair has enjoyed a short trend rally in the last few weeks and has finished the week right at the top of the trend line channels. I will wait and see if price would test resistance around 1.5550 and look for opportunities to short from there. Alternatively, a long trade is possible if price retests dual support (horizontal and trend line) at around 1.5030. When given the choice, I prefer to trade in the same direction as my fundamental views.
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