- As markets gear up for a pivotal week, three potential trading opportunities are emerging in the FX market.
- The USD/JPY pair could continue its recent upward trend as GBP/USD looks to break out of a consolidation phase.
- Meanwhile, GBP/JPY's flag formation could present a potential top breakout opportunity.
- In 2024, invest like the big funds from the comfort of your home with our AI-powered ProPicks stock selection tool. Learn more here>>
The Federal Reserve's upcoming meeting is set to take center stage, with the current market consensus suggesting that the rate-cutting cycle will kick off in May, a shift from the previously anticipated March timeline.
Let's take a look at some intriguing technical opportunities on selected currency pairs for those to profit on the pivotal week's high volatility.
1. USD/JPY - Watch Out for a Breakout Above 149
The recent meeting of the Bank of Japan (BOJ) saw virtually no changes, with the bank maintaining its ultra-dovish monetary policy characterized by negative interest rates and control over the government bond yield curve.
This sets the stage for a continuation of the upward trend on the USD/JPY currency pair, where buyers have already recovered more than half of the losses incurred during the significant correction in the second half of the previous year. 
Presently, a local deceleration is observed around the 149 yen per dollar level, providing opportunities to profit from the upward trend upon breaking above the red line.
In this scenario, realizing this bullish outcome involves surpassing the round barrier of 150 yen, leading to an assault on the long-term peaks of around 152 yen per dollar.
Conversely, the negation of potential increases would entail a drop below 147 yen, paving the way for a more significant retracement with a target near the demand zone at 144 yen.
2. GBP/USD - Look for a Breakout Above Sideways Trading Zone
There has been a clear sideways trend on the main British pound currency pair GBP/USD since around mid-December last year.
The popular cable is consolidating in the range of 1.26-1.28, and a breakout from this range should determine the direction for the quotation at least in the short term.
Technically, a favorable scenario involves an upward breakout aligning with the prevailing market trend, presenting the opportunity to reach the crucial supply zone around the 1.31 price level.
Regarding currency pairs involving the US dollar, it is crucial to monitor the upcoming Federal Reserve meeting scheduled for this Wednesday. As a result, consolidation may persist until that day.
3. GBP/JPY - Bull Flag Breakout in the Cards
The GBP/JPY currency pair has experienced a robust rebound since the start of the month, aligning with a broader uptrend.
The current focus is on the flag formation, which theoretically suggests a continuation of the trend with the potential for a breakout at the top.
The demand side's primary objective is to reach the long-term highs of around 196 yen per pound, established in the second half of 2015.
With both the Bank of England and the Bank of Japan maintaining their current monetary policies in the coming months, the macroeconomic conditions are expected to be favorable for the demand side.
***
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 952% over the last decade, investors have the best selection of stocks in the market at the tip of their fingers every month.
Subscribe here for up to 50% off as part of our year-end sale and never miss a bull market again!
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.