Forex

Best 5 Forex Pairs for the Week Ahead

This week, several currency pairs present compelling opportunities based on both technical analysis and broader macroeconomic factors.

The US Dollar (USD) continues to show strength, driven by the Federal Reserve’s hawkish stance and stronger-than-expected economic data, while certain global economic factors influence other currencies like the Japanese Yen (JPY), Swiss Franc (CHF), and the Euro (EUR).

Below are the best 5 forex pairs for the week ahead poised for potential movement: the USD/JPY, USD/CHF, GBP/USD, EUR/CAD, and EUR/USD.

Each pair shows distinct technical patterns, whether it’s bullish breakouts or bearish trend reversals, providing traders with various strategies to consider.

By understanding the market’s expectations and the underlying technical setups, traders can position themselves for profitable opportunities in the coming week.

1. USD/JPY (Bullish Trend)

Why to trade: The USD/JPY is showing a strong upward momentum with a breakout from a channel pattern. Technical indicators suggest the possibility of further gains.
Trade Idea: Buy USD/JPY.
- Target Levels:
  - First resistance at 153.90.
  - Second resistance at 155.60.
Reason: The USD is likely to remain strong, supported by the Federal Reserve’s hawkish stance and the relative weakness in the Japanese economy. If the price holds above 150.00 and continues to move upwards, a buy position looks promising.

Chart by TradingView.com

2. USD/CHF (Bullish Trend)

Why to trade: The USD/CHF is showing a wedge breakout pattern, indicating upward momentum.
Trade Idea: Buy USD/CHF.
- Entry Point: Around the trendline of the wedge breakout pattern.
- Target Levels: This trade has a high probability of further gains in the coming hours, with significant upside potential.
Reason: The US Dollar remains strong due to a hawkish Fed and stronger US economic performance. The Swiss Franc typically reacts to risk sentiment, and with a stronger USD, this pair looks bullish.

3. GBP/USD (Bearish Trend)

Why to trade: There is a trendline breakout pattern forming, suggesting a bearish shift in momentum.
Trade Idea: Sell GBP/USD.
- Entry Point: Consider entering short positions after the breakout of the trendline.
- Target Levels: The pair may face a downward trend in the short term.
Reason: GBP/USD is in a somewhat volatile phase, and while the Bank of England is not expected to be overly aggressive in tightening policy, the market sentiment is still favoring the USD due to its relative strength. The breakout pattern indicates that a short position could be profitable.

4. EUR/CAD (Bullish Trend)

Why to trade: The EUR/CAD is forming a breakout pattern on the M15 timeframe, indicating the potential for further upward movement.
Trade Idea: Buy EUR/CAD.
- Entry Point: Consider entering long positions around the breakout trendline.
Reason: The EUR could benefit from a relatively stronger economic outlook compared to the Canadian Dollar, especially if there are significant Eurozone-related catalysts. The breakout pattern suggests momentum is shifting to the upside, making a long position attractive.

5. EUR/USD (Neutral to Bearish)

Why to trade: While the PCE inflation data supports the USD, EUR/USD’s technical outlook remains neutral with a slightly bearish bias.
Trade Idea: Sell EUR/USD (if the price breaks key support levels, such as the 1.0390-1.0380 region).
Reason: The slight weakness in the Euro, coupled with the stronger USD (supported by the PCE inflation and Fed’s hawkish stance), makes a bearish bias plausible. However, EUR/USD could also remain range-bound if key support levels hold.

Summary of Key Pairs to Trade:

USD/JPY: Strong bullish outlook due to breakout, buy position recommended.
USD/CHF: Bullish with a wedge breakout, buy position recommended.
GBP/USD: Bearish due to trendline breakout, sell position recommended.
EUR/CAD: Bullish breakout pattern, buy position recommended.

These forex pairs align with the market’s reaction to the US PCE inflation data, USD strength, and technical formations, making them potentially profitable for the coming week.

Please see our related articles for more forex insights.