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Andreas Zanin
Analysis | January 14, 2021

Forex trading opportunities: JPY and AUD

In yesterday’s blog we looked at the potential for a USD rally against the EUR and CHF and if the USD does rally the Yen will also rally. Enclosed are the key levels to watch in EUR/JPY and CHF/JPY. Also, in this article, we will look at two commodity crosses AUD/CAD and NZD/CAD.

In terms of interest rate differentials and bond yields the JPY is oversold – speculators are heavily short and we expect a rally in the Yen, key levels to watch on the charts below.

EUR/JPY DAILY CHART: The rally above 127.00 has failed and we are now looking for any rallies to fail back to the level – A breakout below major support at 126.00 targets the key levels of support indicated. Over the last couple of weeks volatility has dropped which points to a big move and we think it could be to the downside.

CHF/JPY DAILY CHART: We have seen the CHF fall from chart highs and we are looking for a break below support to trigger a sell off on higher volatility to the downside to major support levels indicated.

Canadian Dollar Going Up on Aussie and Kiwi Dollar

The CAD is oversold on the AUD and NZD and we now expect a major rally – the big fiscal stimulus coming in the US is heavily bullish for the Canadian commodity and services demand. We also expect the Bank of Canada in terms of monetary policy to be more hawkish than the RBA and RBNZ, with both the RBA and RBNZ likely to ease rates going forward and add to stimulus.

The NZD and AUD bull trends have been helped by strong Chinese demand but after a strong economic rebound in China, Chinese economic growth will slow and so too will its demand for commodities. Key levels to watch on the charts below…

AUD/CAD DAILY CHART: After a strong move to the upside we are now in a sideways channel – the rally to resistance yesterday was rejected and today we are trading above support. We are expecting a break below support to confirm a trend reversal to the downside which could retrace the whole of the rally that started back in November.

NZD/CAD DAILY CHART: After breaking above the 0.9200 level we have fallen to test the 0.9100 level – we expect any rallies to fail into 0.9150 – 0.9200 and a break below today’s low through 0.9100 to potential, confirm a major trend reversal to the downside.

 

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