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Weekly Forex Forecast (March 28 – April 1, 2016)

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Not much changed last week for the EURUSD amid a lack of market-moving news and light holiday trade. This week doesn’t promise to be much more exciting given the Monday holiday for many banks and non-farm payroll on Friday.

Markets have a tendency to move sideways into the highly-volatile event and this week promises to unfold in a similar manner.

As for the technical landscape, former channel support near 1.1140 will likely attract a bid if tested while the 1.1210 handle should act as interim resistance.

The tight quarters make trading the single currency against the greenback unfavorable at the moment. However, a break above or below one of the levels mentioned above could present a worthwhile opportunity.

My long-term view remains bearish as long as the pair continues to trade below former channel support that extends from the March 2015 low.

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EURUSD key levels on the daily chart

GBPUSD gave traders fits last week. After closing above the 1.4400 handle on March 17th, the pair looked ready to retest confluent resistance at 1.4670.

However, the bears had other plans for the pound last week as they quickly pushed the pair back below the key level to eventually retest the January lows at 1.4080.

Last week’s price action certainly didn’t help clarify the future direction of GBPUSD, a question that has been on everyone’s mind ever since “Brexit” became the new buzz word for the year.

Unfortunately, this week may not provide many answers, at least, not for the base currency as event risk doesn’t pick up until Thursday’s session.

The US dollar, on the other hand, could shed some light on things with Yellen speaking on Tuesday followed by ADP employment change on Wednesday and unemployment claims on Thursday.

But as previously mentioned, all eyes will be on Friday’s non-farm payroll release at its usual time of 8:30 am EST.

GBPUSD support and resistance levels on the daily chart

Following an 850-pip rally that began in January, AUDUSD is quickly approaching an area that must hold if the pair intends to maintain its bullish trajectory. Highs from October and December of last year mark the 0.7380 support zone.

Two other notable levels include the trend line that extends from the September 2015 low as well as trend line support that extends from the January 2016 low.

Whether or not this area is strong enough to propel the Aussie dollar higher is yet to be seen. The price action that forms at this level will dictate whether we see a buying opportunity develop or a breakdown of support, which could lead to a favorable selling opportunity.

With little event risk on tap, the pair will likely remain range-bound in the week ahead. Key resistance can be found at 0.7640 while confluent support comes in at 0.7380.

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AUDUSD confluent support on the daily chart

I mentioned USDCAD on Friday of last week, noting how the pair had broken free from the two-month falling wedge formation that extends from the January high.

The pair not only managed to hold these levels but also managed to gain additional ground before the holiday weekend.

USDCAD falling wedge on the 4-hour time frame

It does appear that the pair closed the week above the 1.3260 level I mentioned on Friday. However, I’m reluctant to put such a fine point on an area of trade from October and November of last year that was anything but precise.

In other words, I need to see more from the pair to justify a buying opportunity.

Keep in mind that the slow holiday trade from late last week will plague the start of the current week. With many banks closed on Monday, I’m not expecting a significant amount of price action early in the week.

USDCAD key support and resistance on the 4-hour chart

The falling wedge on GBPNZD remains at the top of my watch list as we enter a new week of trade. While the future direction of the pair is unclear, falling wedges often act as continuation patterns, which means we could see an eventual break to the upside in an attempt to continue the impulsive rally that began in April of 2015.

This particular pattern has been forming since August of last year. Given the extended period of this phase of consolidation, the eventual break could be quite aggressive.

GBPNZD falling wedge on the intraday chart

If we move down to the 4-hour chart, we can see that a smaller wedge has developed that could provide clues to the future direction of the pair in the week ahead.

A close above the seven-month resistance level would expose the 2.1500 handle while a close below wedge support that extends from the February low would expose 2.0640.

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GBPNZD 4-hour wedge pattern

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