Currency Strength Meter: 22nd November
The currency strength meter this week highlights the stronger currencies were USD, JPY and GBP. The JPY has now jumped above the EURO and is no longer the weakest currency. We were looking for this JPY strength to come in and it could continue in the short term. The EURO is the weakest currency and is getting weaker. The CHF was also a weak currency last week surprisingly which could continue going into this week.
Trending or Reversal Pairs of the week:
EURUSD, EURJPY, EURGBP, USDCHF, CHFJPY and GBPCHF
The data to focus on this week includes the USD, NZD and EURO.
Starting in the US, we have interesting data this week of note we have the Prelim GDP q/q which is forecast to positive. With rising inflation and positive data out of the US we expect this to come in as expected or better. This could keep the USD strong this week. A miss here would see the USD fall but this is unlikely currently. In other US news we will see President Biden announce a new Federal Reserve Chairman. It is likely that the current Chair Jerome Powell will remain in the position but if there is a change we could see Lael Brainard the new chair.
The RBNZ are forecast to hike rates by 25bps this week to 0.75% this could be priced in by the market and the NZD could continue to weaken. If however, in the press conference there is talk of the need to hike further in the future we could see the NZD turn bullish.
Charts To Watch
Despite the NZD weakening and the JPY strengthening the NZDJPY is back at a key support. This pair seasonally is bullish but we have seen the market fall recently. Now the price is at the previous support we could start to look for the reversal.
Fundamentally the RBNZ are forecast to hike rates which is expected but more talk of hikes could drive the NZD higher.
The 4hr time frame is showing the downtrend which could continue this week if the price breaks below the current lows. However, if we do see any positive news for NZD we could see the price break through the highs and rally in line with the seasonal bias.
Another chart of interest for us is WTI CRUDE OIL, this chart is in a strong bullish trend on the weekly chart but the price has reached a key support zone. Not only this but the stock markets have been rallying again and crude oil is highly correlated to the stock markets. So we could see this market start to follow that rally we have seen recently. Looking at the volume profile we can also see that the price has reached a high volume level which could see buyers re enter the market.
Again if the price is going to move higher we should see the 4hr time frame begin to form a bullish trend by making higher highs and higher lows. At the moment we don’t have that we have a bearish trend so we need this to change. If the price can make higher highs by forming a bullish reversal pattern we can look for bullish opportunities.