FX Setups for the Week of April 9, 2018

FX Setups for the Week of April 9, 2018

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Next week’s macroeconomic calendar is rather light at the start with some items of interest showing later in the week. The larger focus will likely be paid to US equities as Q1 earnings season heats up. Given the volatility that’s started to show in the equity space in 2018, these quarterly earnings reports will be key to whether or not pressure continues to show in near-term price action in the S&P 500. This, of course, could carry overtones into the FX space as risk aversion could create a swell of strength in the Japanese Yen.

On the macro front, Wednesday appears to be especially interesting as we’ll get US CPI numbers for last month followed by meeting minutes from the Federal Reserve’s March rate hike a bit later in the day. Below, we look at three FX setups of interest for next week. It’s important to note, these setups are designed for next week. Waiting for next week’s open is key as a gap through support or resistance can vastly alter the analysis behind each of these individual scenarios, thereby nullifying their potential should anything change over the weekend.

USD/CAD Bullish Potential

USD/CAD started a bullish run in February that lasted all the way into mid-March, and over the past few weeks we’ve seen a pullback that’s landed into a key zone of support. The area around 1.2720 is confluent as we have two different Fibonacci retracements within five pips of each other. At 1.2723 we have the 38.2% retracement of the May-September, 2017 major move and at 1.2718 we have the 38.2% retracement of major move from the September low to the March high. This area, combined with a swing-high from February, help to produce a zone that we’ve been following in webinars for a couple of weeks now. Prices have run-into this zone this week, and we’ve seen support starting to show. If this holds as we open into next week, the door remains open for topside under the premise that the higher-low may be set; with the potential for stops to be set below this confluent zone of support with targets cast towards 1.2873, 1.2927 and then 1.3000.

USD/CAD Daily Chart: Higher Low Support Potential 1.2720-1.2758

usdcad daily chart

Chart prepared by James Stanley

GBP/USD Bullish Continuation Prospects

We’ve been following support areas in GBP/USD this week, and the dynamics of Thursday/Friday price action may be opening the door to a continuation of the bigger-picture up-trend in GBP/USD. The big area of interest around GBP/USD for this week was around the 1.4000 psychological level. Prices continued to find support above this price until a splash of USD-strength on Thursday morning. As that USD-strength pulled back, short-term charts started to show a higher-low in GBP/USD, and as USD-weakness took over after Non-Farm Payrolls, GBP/USD surged up to a fresh weekly high. Prices holding support above the 1.4000 psychological level keeps the door open for topside setups for next week, with target potential at both 1.4200 and 1.4240.

GBP/USD Four-Hour Chart: Support Hold Around 1.4000 Leads to Fresh Weekly High

gbpusd four hour chart

Chart prepared by James Stanley

EUR/JPY Short-Side Potential After Return to Resistance

We’ve been following a zone of resistance in EUR/JPY that had previously offered numerous instances of support in the pair in Q4 and the beginning of Q1. This zone runs from 131.43-132.05, and after price action ran below this area in February, bears have remained active by continuing to show lower-high resistance off of tests in this zone. Should this resistance hold as we open in to next week, the door is open for short-side setups with stops investigated above the March high of 132.43, and targets cast towards last week’s swing-low around 130.13.

EUR/JPY Daily Chart: Prior Support as New Resistance

eurjpy daily chart

Chart prepared by James Stanley

To read more:

Are you looking for longer-term analysis on the U.S. Dollar? Our DailyFX Forecasts for Q1 have a section for each major currency, and we also offer a plethora of resources on USD-pairs such as EUR/USD, GBP/USD, USD/JPY, AUD/USD. Traders can also stay up with near-term positioning via our IG Client Sentiment Indicator.

Forex Trading Resources

DailyFX offers a plethora of tools, indicators and resources to help traders. For those looking for trading ideas, our IG Client Sentiment shows the positioning of retail traders with actual live trades and positions. Our trading guides bring our DailyFX Quarterly Forecasts and our Top Trading Opportunities; and our real-time news feed has intra-day interactions from the DailyFX team. And if you’re looking for real-time analysis, our DailyFX Webinars offer numerous sessions each week in which you can see how and why we’re looking at what we’re looking at.

If you’re looking for educational information, our New to FX guide is there to help new(er) traders while our Traits of Successful Traders research is built to help sharpen the skill set by focusing on risk and trade management.

— Written by James Stanley, Strategist for DailyFX.com

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