Kickstart the FX trading day with a technical look at the EURUSD, USDJPY and GBPUSD

Yesterday was the US PPI. It came in weaker than expectations but showed numbers still higher than the Fed’s target for inflation at 2%. The US CPI is next (will be released at 8:30 AM ET). Below are the estimates.

• CPI MoM is expected to show a 0.3% gain vs 0.3% last month.
• CPI YoY is expected to come in at 2.9% up from 2.7% last month.
• Core CPI MoM is expected to rise by 0.2% vs 0.3% last month.
• Core CPI YoY is expected at 3.3%, unchanged vs last month.

If the numbers come out weaker than expected, the normal move is for the USD to move to the downside as yields move lower/stocks higher. If it comes out stronger, I would expect the opposite with yields moving higher/stocks lower and the dollar moves higher.

Traders can have a view but it is what happens after which will give traders more confidence, or tell them, it is time to get out of a losing position. Of course, waiting and reacting after the dust settles is also a possibility for traders.

As a result, it is important to map out the route that may happen with bias-defining levels, targets on where the price will be reaching towards and potentially breaking, and risk levels that will tell traders they are wrong.

In this video above, I look at the 3 major currency pairs – the EURUSD, USDJPY and GBPUSD – from a technical perspective and outline those levels for you so that you know the roadmap and can follow it if the number is stronger (higher dollar) or weaker (lower dollar).

Below are some key levels:

EURUSD. The EURUSD is trading above and below the 200 hour MA at 1.03029 as the market awaits the release and the next shove. Will that be higher or lower?

If lower (stronger than expected CPI),

• The 100 hour MA at 1.02669 is the first target.
• Move below that level and the lows from yesterday’s trading at 1.02388 is the next target
• Below that and the low from Jan 2 at 1.0222 would be eyed
• The low from Monday at 1.0176 is the final target.

If higher (weaker than expected CPI:

• Swing area between 1.0332 to 1.0343
• 38.2% retracement of the move down from December high comes in at 1.0349.
• Above that an the door opens for more upside probing with a swin area near 1.0373 and 1.0383
• 50% of moved down from Decemebr at 1.04028. The 50% of the range from 2022 is also near that level at 1.0405.

USDJPY:The USDJPY fell below a cluster of MA today defined by the 100 bar MA on the 4 hour at 157.469, the 200 and 100 hour MAs near 157.73. That tilted the bias to the downside, but the pair remains confined to a larger up and down range. What key levels are in play on the top and bottom sides?

On a stronger number (higher CPI)

• Traders will look back to the cluster of MAs are the next target starting with the 100 bar MA on the 4-hour chart at 157.469 and up to 157.73.
• Get back above those MAs and 157.91
• Then 158.39 (high from yesterday)
• 158.403 – near other recent swing highs.
• The high from Friday after the jobs came in at 158.83

On a weaker number recent swing low levels comes in at:

• 156.45
• 156.219
• 155.94

Move below 155.94 and the pair is outside the low of the range since December 19 and more downside probing can be expected

GBPUSD:

This article was written by Greg Michalowski at www.forexlive.com.