In this update, we will discuss fundamentals & technical setups, that are worth watching during the coming week. On Friday, the US dollar climbed to a two-week high vs. a basket of currencies as risk-off sentiment wanes.
US Dollar Index – Double Top Resistance
The Dollar Index soared dramatically after breaking a trendline resistance level at 89.70. Most of the buyers entered the market for two reasons:
– Firstly, the single currency Euro fell sharply to a two-week low vs. the greenback as the European Central Bank (ECB) is due to release its monetary policy decision in the coming week (on April 26) and traders seem to price in the dovish monetary policy. A drop in Euro is driving more bulls to the US Dollar.
– Secondly, the investors switched their investments from pound to the greenback after the Sterling extended losses in the wake of dovish remarks from the head of the BOE (Bank of England).
Technically, the index is overbought (RSI above 70) and bulls are exhausted. We may see a retracement up to 90 and 89.75 before seeing another bullish wave in the dollar. On the upper side, Dollar index can face a solid resistance near 90.55 and 90.85.
Nikkei 225 – Shooting Star Pattern In Play
The Japanese stock market index Nikkei gave up 0.1% to 22,162.24. The index grew 1.8% this week, its fourth straight weekly gains. However, the markets remained muted on Friday as investors didn’t find any solid reason to trade the Nikkei. But they do have it for the coming week.
The BOJ (Bank of Japan) is scheduled to release the monetary policy report on April 27. Investors appear to save their shots before the release of the policy rate. BOJ is widely expected to keep the interest rates on hold at -0.10%.
Nikkei 225 – Forecast
The Japanese index Nikkei is trading below a double top resistance level of 22,380. The leading indicators RSI and Stochastics are moving in the overbought zone and signaling a potential for a bearish reversal. Moreover, Nikkei has formed a shooting star below 22,385 which is signaling a neutral sentiment of investors. The breakout of 22,385 can lead the index to next resistance level of 22,985 and 24,000. Whereas, the support remains at 20950.