Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

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.
  • In 2024, invest like the big funds from the comfort of your home with our AI-powered ProPicks stock selection tool. Learn more here>>

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.

***

Take your investing game to the next level in 2024 with ProPicks

Institutions and billionaire investors worldwide are already well ahead of the game when it comes to AI-powered investing, extensively using, customizing, and developing it to bulk up their returns and minimize losses.

Now, InvestingPro users can do just the same from the comfort of their own homes with our new flagship AI-powered stock-picking tool: ProPicks.

With our six strategies, including the flagship "Tech Titans," which outperformed the market by a lofty 1,183% over the last decade, investors have the best selection of stocks in the market at the tip of their fingers every month.

Subscribe here and never miss a bull market again!

Subscribe Today!

Now with CODE UKTopDiscount you can get as much as a 10% discount on InvestingPro annual and two-year subscriptions.

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.

Latest comments

Interesting
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.