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A new trading week is upon us, and with the recent CPI data out of the US showing inflation remains high, we have some exciting setups to explore. The strong inflation figures are typically supportive for gold, yet on Friday, we saw gold crash from 2940 to 2880, is this the beginning of a reversal or just a healthy correction before another bullish leg?
In the week ahead, we have key monetary policy announcements from Australia and New Zealand, which could bring heightened volatility across the forex market. Let’s dive into the charts and identify the highest-probability trade setups.
DXY (US Dollar Index)
The US dollar has started weakening, despite inflation data suggesting otherwise. While high inflation typically supports a stronger dollar due to expectations of interest rate hikes, the technical charts paint a different picture. On the daily time frame, the dollar index is forming lower highs and bearish divergence, indicating a shift in momentum. The daily chart confirms a bearish structure, with Fibonacci projections pointing toward 105.00 – 104.50 as the next key support levels, with a possible deeper correction toward 103.60. While short-term pullbacks are expected, overall, the dollar remains under pressure.
GBPAUD
GBPAUD is showing strong signs of a potential bearish reversal. Both the weekly and daily time frames reveal divergence, suggesting the recent bullish trend is running out of steam. On the 4-hour chart, price action confirms the reversal, with lower highs forming and sellers stepping in. Fibonacci extensions indicate that price could drop toward 1.9060 in the coming sessions. A retracement toward 2.0330 could provide an optimal short entry before the next move lower. With the Reserve Bank of Australia’s upcoming interest rate decision, expect heightened volatility that could accelerate the move.
NZDUSD
With the US dollar showing signs of weakness, NZDUSD is primed for a bullish move. The pair has reached a strong Fibonacci support zone on the weekly chart, where buyers have already started stepping in. The daily structure remains bullish, with key upside targets at 0.5946. However, given the sharp rally, a short-term pullback is expected before the next leg higher. The best buying opportunity would likely emerge around the 0.5605 – 0.5650 retracement zone. With monetary policy announcements from the Reserve Bank of New Zealand on the horizon, this setup could turn into a high-probability trade.
Click to see a key breakout zone that could send NZDUSD soaring
USDCHF
USDCHF is struggling to break past a major resistance zone on the weekly chart, signaling a potential move lower. The daily time frame reveals bearish divergence, confirming that sellers are gaining control. Key resistance remains at 0.9100 – 0.9150, while downside targets sit around 0.8800 – 0.8700. Instead of chasing the move lower, waiting for a pullback to 0.9100 before entering a short position could offer an ideal entry point. Given the USD’s broader weakness, this pair could be one of the cleanest bearish setups of the week.
XAUUSD (Gold)
Despite Friday’s sharp drop, gold’s long-term bullish trend remains intact. The larger structure suggests that the rally isn’t over yet, with the ultimate upside target sitting at 3124. The weekly chart highlights a key support zone between 2553 – 2590, while daily price action suggests that gold may first correct toward 2841 – 2826 before resuming its bullish trajectory. A short-term bounce toward 2902 may occur before further downside, providing a potential re-entry for buyers. Once gold finds support, the next move could take price well beyond its previous highs.
Key Takeaways & Strategy for the Week
The US dollar remains under pressure, setting up bullish opportunities in pairs like NZDUSD while reinforcing bearish setups in USDCHF. Gold’s pullback is likely a buying opportunity, not the end of its rally, with key support levels offering potential trade entries. GBPAUD, on the other hand, is showing signs of exhaustion, making it a strong candidate for shorts. As volatility increases with upcoming interest rate decisions, precision and timing will be key.
The markets are setting up for some exciting movements.
Stay disciplined, manage your risk, and take advantage of these high-probability setups.
Trade smart, trade safe, and have a profitable week ahead!