It’s going to be a busy week for the pound next week. We kick things off on Monday with the UK labor figures for January. The unemployment change report is eyed at 22,600 while the unemployment rate is seen at 3.8%. Also due next week, is the CPI report for the same month is eyed at 1.3% with the core reading at 1.5%
GBP Pair to Trade: EURGBP
On the monthly chart, we can see that EUGBP is testing support at the 100 SMA. In the past, the currency pair has always found support at this moving average. This time around, it could too!
Making another bullish case for EURGBP is the setup on the daily time frame. After breaking resistance at the falling trend line, the currency pair has retested it this time, for support. Reversal candles around 0.8300 may signal that a rally could soon happen. Meanwhile, a strong close below the psychological handle would indicate that a bigger sell-off is in store for EURGBP.
This upcoming week, the Reserve Bank of Australia will release the minutes of its last meeting. If you remember, the RBA did not cut rates. Market participants will be looking closely into the details which suggest the direction of monetary policy in Australia. Along with this, the country’s labor figures are due on Thursday. The employment change is expected at 31,000 with the unemployment rate seen at 5.2%.
Another key event for the Aussie will be the PBoC’s rate decision. With the coronavirus hampering economic activity in Australia’s largest trading partner, further easing from China could be bullish for the AUD.
AUD Pair to Trade: AUDCHF
On the 4-hour chart, we can see that an inverse head and shoulders pattern has formed on AUDCHF. Positive data, a hawkish RBA meeting minutes, or a dovish PBoC could trigger a strong rally above 0.6600. AUDCHF may then begin trading higher to its January highs at 0.6730.
The euro has been aggressively sold off since February started. Could next week’s events help it recoup some of its losses? The euro zone CPI is due for release next week alongside the PMI reports for the region, Germany, and France. More importantly, the ECB meeting minutes should also provide the market with guidance on the future of monetary policy.
EUR Pair to Trade: EURJPY
The weekly and daily time frames of EURJPY suggest that the sell-off is not yet over. On the higher time frame, the currency pair has just bounced off resistance at the falling trend line.
Meanwhile, on the daily time frame, a head and shoulders chart pattern has materialized. If there are enough sellers in the market, it may not take long for us to see EURJPY drop to the 117.00 handle.
Perhaps the most closely-watched central bank release next week is going to be the FOMC meeting minutes. In his recent speeches, Fed Reserve Chairman Powell hinted that the central bank is not keen on cutting rates anytime soon. If the minutes confirm his rhetoric, we could see more dollar strength.
Meanwhile, Canada is due to release its CPI and retail sales reports next week. These events could spark volatility on USDCAD and provide the opportunity for a high-probability trade.
USD Pair to Trade: USDCAD
On the daily time frame, we can see that USDCAD has shot through resistance at the falling trend line. The currency pair is retesting it for support and reversal candles around 1.3250 could mean that it could soon trade higher to its May 2019 highs at 1.3500.