Mid-Week Technical Outlook: G10 currencies

• Dollar steady ahead of FOMC minutes
• EURUSD approaches key resistance
• GBPUSD bulls back in town?
• USDJPY trapped within wide range
• USDCAD set to challenge 50-day SMA?

A tense atmosphere gripped financial markets on Wednesday amid mounting geopolitical tensions and incoming US economic data.

Although global equities rose in the previous session on dovish remarks from Fed officials, the overall uncertainty and growing caution may limit upside gains. In the commodity space, oil prices slipped after an early-week surge while gold widened the gap – rising over 0.7% as Treasury yields retreated.

Looking at currencies, the dollar remains relatively stable despite dovish Fed remarks – gaining against most G10 currencies ahead of the FOMC meeting minutes this evening.

The USD Index is wobbling above 105.80 as of writing but could see some more action in the second half of the week, especially with the U.S. inflation data scheduled for release on Thursday.

Given the chaotic cocktail of themes influencing markets, this may present some opportunities across the FX space. Here are a couple of trading setups we are keeping an eye on:

EURUSD approaches key resistance

Euro bulls could make a comeback after prices secured a daily close above the 1.0600 level. Although prices are trading below the 50, 100, and 200-day SMA, the bearish trend may be threatened if a solid breakout above 1.0650 is achieved. This may open a path higher toward the 50-day SMA at 1.0750 and 1.0820 – where the 200-day SMA resides. Should prices keep below 1.0600, this could trigger a decline back towards 1.0500.

GBPUSD bulls back in town?

The GBPUSD may be in the process of a trend reversal after closing above the 1.2275 level. Bulls seem to be gaining momentum on the daily timeframe observed by the six consecutive positive daily candlesticks. Should prices push beyond the 1.2275 level, this could open the doors towards 1.2340 and 1.2540, respectively. A decline back below 1.2275 could see prices slip towards 1.2160.

USDJPY trapped within range

After the aggressive reaction to the 150.00 level earlier this month, the USDJPY remains trapped within a wide range with support at 147.50 and resistance at 150.00. The currency pair remains pulled and tugged by various fundamental forces while the technicals suggest that a breakout could be on the horizon. Should prices slip below 148.40, this may trigger a selloff towards 147.50 and 146.70 – where the 50-day SMA resides. Alternatively, a strong break above 149.30 could see prices re-challenge 150.00.

USDCAD set to challenge 50-day SMA?

The USDCAD has found some support at 1.3570 after falling for four consecutive days. Bears seem to be back in the picture and could switch into a higher gear if a solid breakdown below 1.3570 is achieved. This could result in a decline towards the 50-day SMA at 1.3540 and 1.3450 – a level just below the 200-day SMA can be found. If bulls can push prices back above 1.3640, the first checkpoint can be found at 1.3690 before a possible move back towards 1.3750.

USD EURUSD GBPUSD USDJPY USDCAD MACD Federal Reserve