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3 Technical Forex Setups With High Profit Probability: EUR/USD, USD/JPY, GBP/USD

Published 20/02/2024, 10:09
Updated 02/09/2020, 07:05
  • There could be trading opportunities in key currency pairs like the EUR/USD, USD/JPY, and GBP/USD in the coming weeks.
  • EUR/USD has bounced off key support amid renewed buying interest as GBP/USD braces for a potential consolidation breakout.
  • Meanwhile, USD/JPY has continued moving up, testing long-term highs amid the Bank of Japan's dovish stance.
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Moves by major central banks are set to spark trading opportunities in key currency pairs such as EUR/USD, USD/JPY, and GBP/USD.

Investors will closely monitor the Fed, which is expected to postpone the first interest rate cuts to May/June.

Notably, being a presidential election year, the Fed might exercise caution to maintain impartiality and financial market stability, potentially limiting major movements before the election.

In the British pound's case, a potential pivot may accelerate due to a combination of decreasing inflation and recent economic indicators pointing towards an impending recession.

On the other hand, the USD/JPY pair is approaching long-term highs. The Bank of Japan currently faces a dilemma with weak GDP readings and lower inflation forecasts, creating an unfavorable environment for interest rate hikes.

However, the intense supply pressure on the Japanese yen may leave BOJ officials with limited choices.

Meanwhile, EUR/USD, despite facing strong supply-side pressure testing the 1.07 area amid periodic dollar strength, continues to find support.

Let's take a deeper look at the technical charts of these three currency pairs as they offer excellent opportunities at the moment.

1. EUR/USD Rebounds Off Key Support: Bounce Worth Buying?

The demand zone established in November and defended in December has once again prompted a rebound, suggesting further bullish developments.

EUR/USD 5-Hour Chart

Buyers could charge higher, targeting the supply zone near 1.0850. Breaking this zone would pave the way for an advance toward local highs, situated just above the round level of 1.11.

Conversely, a drop below 1.07 opens the door to additional declines, aiming for levels below 1.05. The likelihood of this scenario increases if the Fed delays the anticipated pivot, expected to commence no later than June this year.

2. GBP/USD: Consolidation Breakout Inches Closer

The main area of support on the GBP/USD currency pair is currently the area falling around 1.25. This is also the neckline of a potential RGR formation, which could be the starting point for a deeper decline.GBP/USD Daily Chart

If this scenario unfolds, sellers will target the next round level of 1.24 and the demand zone slightly above 1.22.

The Federal Reserve should offer macroeconomic support, and ideally, the Bank of England's inactivity would support this move.

3. USD/JPY: Another BOJ Intervention to Spark a Move

The USD/JPY currency pair has continued moving up, propelled by the ultra-dovish policy of the Bank of Japan and high rates in the US.

The demand side is poised to challenge and potentially correct the long-term high, situated just below 152 yen per dollar.
USD/JPY Daily Chart

Without a shift in BOJ's monetary policy, anticipating a significant change in the trend becomes challenging.

We may witness isolated interventions; however, based on recent years' experiences, these interventions tend to be localized and typically serve as temporary measures.

If there is a potential reversal to the downside, sellers will likely face their first significant challenge around the lows in the price region of 141 per dollar.


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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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