Mid-Week Technical Outlook: Commodity Currencies & Majors In Focus

A wave of risk aversion swept across financial markets on Wednesday as mounting concerns over rising interest rates and recession fears whacked global sentiment.

Stock markets flashed red and commodities tumbled amid the risk-of mood, while the Japanese Yen hit a fresh 24-year low against the mighty dollar. In the FX space, commodity currencies got no love, the dollar flexed its muscles while the pound rebounded on rising BoE rate hike expectations. The second half of the week could be volatile for markets due to Fed Chair Jerome Powell’s testimony to Congress on Wednesday and Thursday. Economic data from major economies could also add more spice, presenting fresh opportunities across FX markets.

If technical analysis is what you seek, then check out the setups below covering commodity and major currencies!

AUDUSD to breach major support?

A major breakdown could be on the horizon for the AUDUSD. Prices are under pressure on the daily charts and there have been consistently lower lows and lower highs. A solid break and daily/weekly close below the 0.6850 support could open doors to levels not seen since May 2022 around 0.6650. Should 0.6850 prove to be reliable support, a rebound back towards 0.7050 and 0.7150 could be on the cards.

Time for USDCAD to resume uptrend?

With the Dollar drawing strength from aggressive rate hike bets and the Canadian dollar weakening as oil prices tumble, the USDCAD has the potential to push higher. Prices are trading above the 50, 100, and 200-day Simple Moving Average while the MACD trades above zero. A rebound from the 1.2900 support could trigger an incline towards 1.3100. Should 1.2900 proves to be unreliable support, prices could descend towards 1.2780 and 1.2700, respectively.

NZDUSD primed for significant breakdown?

After bouncing within a 150 pip range over the past few days, the NZDUSD could be preparing to breakdown.

All eyes will be on how prices behave around the 0.6220 support level which has held since May 2020. A strong breakdown below this point could encourage a selloff towards 0.6100 and 0.6030. A move back above 0.6300 may suggest an incline back towards 0.6450 – a level just below the 50-day Simple Moving Average.

EURUSD on standby…

Nothing much seems to be going on when looking at the EURUSD. Prices remain trapped within a range with support at 1.0480 and resistance around 1.0570. The currency could be waiting for a fresh directional catalyst before making its next big move. A breakdown below 1.0480 may trigger a decline towards 1.0350. Alternatively, a move back towards 1.0630 may open the doors back towards 1.0780.

GBPUSD experiencing ‘dead cat’ bounce?

The GBPUSD remains under pressure on the daily charts as there have been consistently lower lows and lower highs. Prices are trading below the 50, 100, and 200- day Simple Moving Average while the RSI has bounced from oversold territory. A strong breakdown below 1.2150 could signal a decline towards 1.2000. Alternatively, a strong move above 1.2300 may encourage bulls to target 1.2450 and 1.2650, respectively.

What next for the USDJPY?

After hitting a new 24-year high… what is next for the USDJPY?

Prices remain heavily bullish on the daily charts with the daily close above 136.00 signalling further upside. Although the USDJPY has slipped from the 24-year high of 136.71, this technical throwback could open doors towards 137.00 and higher. Should prices close back below 136.00, the next key level of interest can be 134.00.

Bonus: Gold waits on Powell

Gold remains in a tight range ahead of Powell’s testimony to Congress on Wednesday and Thursday.

Interestingly, prices are trading below the 200-day Simple Moving Average which could encourage bears in the near term. A close below $1830 may trigger a decline towards $1800. If prices push back towards $1858, a move towards $1870 and $1900 could be on the cards.

EURUSD GBPUSD USDJPY AUDUSD USDCAD NZDUSD