Mid-Week Technical Outlook: FX Movers & Shakers

Market sentiment brightened on Wednesday with global equities rallying for a second day as investors cheered strong earnings and signs of easing tensions in Ukraine.

We already knew this would be an eventful week for financial markets thanks to the growing caution and anticipation ahead of the US inflation report. So far markets have certainly not disappointed, with global stocks and currencies bursting with life. The S&P500 is up over 1.7% this week while king dollar and Yen have depreciated against most G10 currencies. Interestingly, the Australian dollar is looking pretty, the same can be said for the New Zealand Dollar.

With less than 24 hours left until the US CPI report is released, here are some technical setups we have on our radar.

Dollar Index wobbles around 95.50

The Dollar Index (DXY) remains on standby ahead of the US inflation report. As discussed earlier in the week, a report that meets or exceeds expectations may fuel speculation over a more aggressive hawkish cycle and a possible 50-basis point rate hike in March. This may inject dollar bulls with enough inspiration to send the DXY towards 96.00 and beyond. Should prices remain below 95.50, bears are likely to eye 94.56 and lower.

NZDUSD gearing for a breakout?

The NZDUSD has the potential to push higher if a daily close above 0.6700 is achieved. This could open the doors towards 0.6800 and 0.6860, respectively. Should 0.6700 prove to be unreliable resistance, a decline back towards 0.6600 and 0.6530 on the cards.

AUDUSD breakout or rejection?

It may be wise to keep a close eye on how prices behave around 0.7180. A solid break above this resistance could encourage a move towards 0.7250 and 0.7300. If bulls are unable to push above 0.7180, the currency pair could decline back towards the previous higher low around 0.7070 before targeting 0.6990.

USDCAD presses against 1.2650

The USDCAD is struggling to keep above the 1.2650 level with bears chipping at this support with each passing day. A breakdown could be on the horizon which may open the doors towards 1.2580. If the dollar receives a boost from the pending inflation report, this could trigger a rebound on the USDCAD with 1.2750 and 1.2800 acting as key levels of interest.

EURUSD on standby…

Where the EURUSD concludes this week may be heavily influenced by the US inflation data. The key levels of interest can be found at 1.1482, 1.1424, and 1.1370. Although the trend is turning bullish on the daily charts, a strong dollar could drag the currency pair back towards 1.1320 and lower. Should bulls achieve a solid breakout above 1.1482, this could open the doors towards 1.1558.

USDJPY finds comfort around 115.50

Prices remain in a bullish channel on the daily charts. A strong move above 115.50 could signal an incline towards 116.00 and 116.30. Should 115.50 prove to be an unreliable resistance, a decline back towards 114.50 and 114.00 could be a possibility.

GBPUSD gearing for breakdown?

An appreciating dollar could encourage bears to attack the 1.3500 level. If this level is breached, this could trigger a selloff towards 1.3400 and 1.3350. Alternatively, a breakout above 1.3600 should open a path towards 1.3670 and 1.3750.

Bonus: S&P500 bulls back in town

It looks like S&P500 bulls are back in the building this week with prices bursting above 4545 on Wednesday. A breakout 4590 could trigger a move higher towards 4640. If bulls run out of steam and prices slip back below 4545, the next key level can be found at 4495.

Bonus: Nasdaq presses against 15000

The Nasdaq100 is turning bullish on the daily charts. A strong daily close above 15000 may signal an incline towards 15300. If 15000 proves to be strong resistance, prices may decline back towards 14500.

Bonus: Gold shines ahead of CPI data

It has been a positive week for gold with prices breaking above the $1831 resistance level. A daily close above this point may trigger an incline towards $1845. However, weakness below $1831 could inspire bears to target $1810 and $1800. Ultimately, where the precious metal concludes this week will be influenced by the US inflation report. 

USD EUR CAD JPY AUD NZD Gold Oil SMA CPI