Economic Events Brief, Jan 23 – Potential Trade Setups in the USD/JPY & USD/CAD
Arslan Butt • 2 min read
Asian session began with a monetary policy decision from the Bank of Japan. As expected, the central bank kept monetary policy steady and cut its inflation projections. The BOJ also kept its short-term interest rate target at -0.1%, reinforcing the sentiment that it’s not in a rush to exit the ultraloose monetary policy.
In response, the Japanese Yen weakened as the dovish policy was made by 7-2 voting. Here, seven favored keeping rates steady and only two voted for a rate hike.
Watchlist – Top Economic Event
Canadian Dollar – CAD
Core Retail Sales m/m – The Statistics Canada is due to release Canadian core retail sales at 13:30 (GMT). The forecast isn’t in favor of the Loonie as Canadian economy seems to face a plunge in core retail sales to -0.4%.
Retail Sales m/m – Likewise, the retail sales are also expected to fall by -0.6%. This can be due to a massive drop in crude oil prices, yet a negative figure leaves its mark.
USD/CAD – Bearish Marobozu Breaking Hurting Bias
The USD/CAD has formed a bearish Marobozu pattern on the 4-hour chart, signaling a strong bearish bias for traders. The pair has completed 38.2% Fibonacci retracement and has also entered the overbought zone which adds to the bearish sentiment of traders.
Daily Technical Levels
Key Trading Level: 1.3297
USD/CAD – Trade Plan
I’m looking to open a sell position below $1.3340 with a stop loss above $1.3370 and take profit of $1.3295.
USD/JPY – Bullish Channel & Dovish BOJ
The BOJ left the monetary policy on hold, keeping the interest rate unchanged at -0.10% which is weakening the safe haven currency JPY. The technical outlook of the USD/JPY remains bullish as the pair has crossed above a 20 periods EMA resistance area of 109.640. The USD/JPY can face next resistance around 110.250.
Taking a look at the 4-hour timeframe, the pair is heading towards 61.8% Fibo levels at 110.300. The pair can take a bearish reversal below this level.
Daily Technical Levels
Key Trading Level: 109.53
USD/JPY – Trade Plan
The idea is to stay bullish above 109.500 with a stop below 109 and take profit at 110.200. Selling will be preferred below 110.300 today.
Good luck and stay tuned to FX Leaders for more updates!