- As markets prepare for a pivotal week, three potential trading opportunities are emerging in the forex market.
- The USD/JPY pair may continue its recent uptrend as the GBP/USD appears to be exiting a consolidation phase.
- Furthermore, the GBP/JPY flag formation could present a top breakout opportunity.
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The Federal Reserve’s next meeting is expected to take center stage, and market sentiment suggests the rate-cutting cycle will begin in May, a shift from the previously expected March timeline.
Let’s take a look at some exciting technical options on selected currency pairs for those looking to take advantage of the high volatility of this crucial week.
1. USD/JPY – Watch for a break above 149
The latest meeting of the Bank of Japan (BOJ) changed largely nothing, with the bank maintaining its ultra-accommodative monetary policy characterized by negative interest rates and control over the government bond yield curve.
This paves the way for a continuation of the uptrend on the currency pair, where buyers have already recouped more than half of the losses during the significant correction in the second half of the previous year.
Currently, a local deceleration is observed around the level of 149 yen per dollar, which provides opportunities to take advantage of the uptrend if the red line is crossed.
In this scenario, achieving this bullish result involves surpassing the round barrier of 150 yen, leading to an attack on long-term highs of around 152 yen per dollar.
Conversely, the negation of potential upside would imply a move below 147 yen, opening the way for a more significant retracement with a target close to the 144 yen demand zone.
2. GBP/USD – Looking for a break above the sideways trading zone
Since mid-December last year, the main currency pair in the British pound, , has been clearly sideways.
The popular cable is consolidating in the 1.26-1.28 range, and a breakout of this area should determine the direction of the bid, at least in the short term.
Technically, a favorable scenario involves an upward breakout that aligns with the prevailing market trend, giving the opportunity to reach the crucial supply zone around the 1.31 price level.
When it comes to currency pairs involving , it is crucial to watch the upcoming Federal Reserve meeting scheduled for this Wednesday. Therefore, the consolidation can continue until today.
3. GBP/JPY – Breaking the bull flag is on the agenda
The currency pair has seen a strong recovery since the start of the month, which is in line with a broader uptrend.
The current focus is on the flag formation, which theoretically suggests a continuation of the trend with the potential for a breakout at the top.
The main target on the demand side is to reach long-term highs of around 196 yen per pound, set for the second half of 2015.
With the Bank of England and the Bank of Japan maintaining their current monetary policy in the coming months, macroeconomic conditions are expected to support demand.
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Warning: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice or investment recommendation and is not intended to induce the purchase of assets in any way. I would like to remind you that any kind of asset is evaluated from several points of view and involves high risk. Therefore, any investment decision and the risk associated with it lies with the investor.