This week turns out to be very difficult on a technical level, so let’s see the short-term dynamics on Forex
We have one of the most complex weeks ahead of us from the point of view of timing the dynamics as we do not have significant references in terms of macro data, such as happened last week for example where we could expect the achievement of some important levels thanks to the volatility expected on the release of macro data.
This week promises to be very technical and also a week that requires a lot of patience from an operational point of view, with constant and slow movements alternating with faster movements that could surprise operators. In this sense yesterday we saw a stable directional currency market in favor of the dollar, in practice the trends seen on Friday continued with the downward movement of EurUsd and GbpUsd and the upward movement of UsdJpy which came to touch area 133 In this context it is therefore necessary to start considering which are the most important levels at a technical level for the currency market and beyond.
There is also a lot of expectation regarding the stock market which is still in the high area but which, according to the statistics on weekly movements, could close the week in negative.
Forex reaches important levels
The main Forex majors, namely EurUsd, GbpUsd, UsdJpy, touch very important levels from a technical point of view on a weekly basis. EurUsd went to touch the 1.07 area, far from the 1.10 seen only last Thursday, while GbpUsd this morning went just below the 1.20 area. As for UsdJpy we went back to area 133 last night while this morning we went back to area 132. We can say that in this market overview the most volatile and most sensitive exchange rate to the dollar is precisely the exchange rate with the Yen as it is the only exchange rate against the dollar that refers to a currency area that does not envisage restrictive monetary policy moves, therefore an exchange rate completely sensitive to the dollar. As far as EurUsd is concerned, we have seen how last week the exchange rate was used to sell in the 1.10 area and therefore the dynamics appear to be strongly short on a weekly basis.
The fact that the trend is totally bearish must not make us think that EurUsd cannot make some useful rebound to fetch attractive levels to continue this long-term corrective movement, in line with what happens on the monthly chart where it seems that the is still strongly bullish in the long term, in the sense that the lows below parity could probably be the absolute lows between now and the end of 2023 which refer to the area between 1.0680-1.07, an area which corresponds to the highs reached between mid-December and the beginning of January, levels from which the movement that brought the exchange rate first to consolidate towards 1.09 and then accelerate towards 1.10.
While we talked about the December highs for EurUsd as possible target levels for a short-term movement, for the GbpUsd) exchange rate we instead have a very interesting low area which refers to the levels between 1.1960 and 1.1990, levels already close to the current prices reached in the morning even if still far from the lower end of this area.
What to expect today
On EurUsd we could expect further downward extensions that would pinch that area we were talking about earlier, i.e. the area below 1.07 up to 1.0680 and then from there hypothesize a rebound which could however really start tomorrow. The same goes for GbpUsd which could further accelerate downwards towards the levels we were talking about, i.e. area 1.1960 as an important minimum to start considering, as for EurUsd, a rebound which could however materialize in tomorrow’s day. In short, we have before us a purely technical market that will put a strain on the patience of many traders who are waiting for fast market movements.
As far as equities are concerned, we could expect further upward stretches today but only to get useful maximums from an interesting retracement on a weekly basis, especially as regards the Nasdaq which presents a dynamic with as many as 5 consecutive upward candles, a rarity at a technical level.
Original article published on Money.it Italy 2023-02-07 15:55:19. Original title: Trading, Forex torna su livelli interessanti: EurUsd e GbpUsd sotto la lente