Amidst a wild trading week, there is still much more to unpack today and for the rest of the week. After the Fed's recent rate pause, the ECB had other plans for their currency. Meanwhile, the BOJ is gearing for a volatile day before the bank rates and statements later today. Here is how we're trading with the sentiment and data for the EUR & JPY currencies.
On the EdgeFinder, this pair is neutral. Weighed down by the recent downtrend, the score remains just under a buy. However, the ECB just raised its rates from 3.75% to 4% as sentiment revolves around the fact rates may stay higher for longer. Despite the looming recession fears in the European economies, target inflation is still in the ECB's sights.
Meanwhile, the RBNZ has the highest rates on the EdgeFinder at 5.5%. Seems hawkish, but they are not projected to go any further according to the central bank officials who have hinted that they will focus on pausing or cutting from now on.
Gold makes a comeback on the 1D timeframe. After breaking under a long term trend line, the metal paired those losses today on strong sentiment against the recent rate news. Investors may be shrugging off the concerns that the Fed may want to hike somewhere down the line, if Core PPI and Core CPI don't come down more.
Price is retesting the rising trend line as resistance now, but today's strong momentum may be enough to break higher. If today's candle ends similar to the way it looks now, we'll be looking at a strong rejection from the lows on a bullish hammer candle.
An interesting case here for CHFJPY which has been ranked as a strong buy for some time now. It is now the second-most shorted pair on the retail side, but price continues to push higher. This is likely due to the dovish sentiment around the yen and the BOJ which we have discussed in earlier articles. Meanwhile, CHF hovers in the positive range on interest rates.
CHFJPY has seasonality, trend reading, and every else on its side except for GDP growth. As Japan's economy bustles, the yen fades in value due to ultra-loose monetary policy. Although the yen is so oversold at this point, it will continue to likely crumble if we see a dovish BOJ statement today.
Same story as always: retail trades against the most bullish and bearish pairs on the market. Just from looking at this chart, we can probably assume that EURGBP is steeply down, while AUDJPY is moving higher on the long term timeframe. Sure enough, I just looked at those charts and yes, that's exactly what's happening.
Smart Money Spotlight
CHFJPY bullishness is reinforced by this one chart on the Smart Money Tracker page. As you can see on the bottom chart, the bias towards the upside has been increasing for the past four weeks now. At the same time, so has price. On the top chart, there is a steeper decrease in the number of long contracts going into the yen (the red line) versus CHF (the blue line).
The Central Bank Tracker shows one more hike before it sticks at this level indefinitely. As a result, inflation projections are pointing downward. So, over time prices should drop, but the ECB worries that it will also cause a recession. EUR is in a tough spot in term of monetary policy, but overall, it's a hawkish-leaning currency.
AI- Generated Trading Setups
AI-generated bullish/bearish bias setups on forex currencies, gold, & indices.
Pound pairs are now a stronger bullish reading on the EdgeFinder than any other currency this week. With PMI data coming in the UK on Thursday, here is what to expect for the GBP pairs in the coming days. EdgeFinder Analysis GBPAUD is the strongest of the GBP pairs today at +7. The score increased […]
Tomorrow's PPI number will be another impactful factor on investor sentiment around dollar-based assets. We have already talked about CPI's recent influence on the markets, but here is what can happen tomorrow on a beat or miss scenario. EdgeFinder Analysis AU is now at -6, one point higher than yesterday's -7 due to economic numbers […]
Gold's price broke under a three-month long supportive trend line. Although the break below has the metal down almost half a percent on the day already, there is still a bullish case for the metal for a few reasons. EdgeFinder Analysis UJ is bullish at +6 going into the week. The dollar in general is […]
DISCLAIMER: All comments made by TraderNick’s Forex Group, LLC are for educational and informational purposes only. All comments should not be construed as investment advice regarding the purchase or sale of any securities or financial instrument of any kind. Please consult with your financial adviser before making an investment decision regarding any securities or financial instruments mentioned by TraderNick’s Forex Group, LLC. TraderNick’s Forex Group, LLC assumes no responsibility for your trading and investment results. All information on any of the platforms utilized by TraderNick’s Forex Group, LLC was obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. TraderNick’s Forex Group, LLC, its employees, representatives, and affiliated individuals may have a position or effect transactions in the securities and financial instruments herein and or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading of any type involves very high risk and may not be suitable for all investors. TraderNick’s Forex Group, LLC, its subsidiaries and all affiliated individuals assume no responsibility for your trading and investment result. Read our full disclaimer here
There is a significant degree of risk involved in trading securities. With respect to foreign exchange trading, there is considerable risk exposure, including but not limited to, leverage, creditworthiness, limited regulatory protection and market volatility that may substantially affect the price, or liquidity of a currency or currency pair. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading in CFDs. You should consider whether you can afford to take the high risk of losing your money.