US Dollar (USD) rose against the Hong Kong Dollar (HKD) on Wednesday, for the third day in a row, after completing the double top price pattern on the daily chart. The USD/HKD pair is poised for a major reversal after the upbeat US inflation report.
The pair is being traded around 7.7539 at 7:00 GMT in Asia. A Support can be noted around 7.7536, the trendline support, ahead of 1.7521, the swing low of the recent wave on the daily chart. The pair bottomed last week before resuming the upside movement and the same trend is expected to continue this week.
On the upside, USD/HKD could face a hurdle near 7.7555, the 23.6% fib level and then 7.7594, the 50% fib level resistance as demonstrated in the above chart. The pair recently completed the double top price pattern which emerged on the daily chart last month.
Hong Kong Inflation
On Tuesday, April 22, the Census and Statistics Department of Hong Kong is due to release the Consumer Price Index (CPI) report for the previous month which is considered a main gauge for inflation. According to average forecast of different analysts, the CPI in Hong Kong jumped by 4.45% last month as compared to 3.9% in the same month of the year before, better than expected actual outcome will be seen as bearish for USD/HKD and vice versa.
The same day i.e. April 22, the Census and Statistics Department, Hong Kong will also release the unemployment report. According to median projection of analysts, the rate of unemployment in Hong Kong remained steady at 3.1% last month as compared to the same rate in the month before, higher than expected actual reading will be seen as bullish for USD/HKD and vice versa.
On Friday, April 25, the Census department of Hong Kong will release the business confidence report for the second quarter of the ongoing year. According to average forecast of different analysts, the business confidence jumped by 15.09 points in the second quarter as compared to 6.00 points in the quarter before, higher than expected business confidence report will be bearish for USD/HKD and vice versa.
Inflation in the US rose unexpectedly by 1.5% last month as compared to 1.1% in the same month of the year before. The data up beat the median projection of 1.4% increase. Similarly, the core inflation also jumped by 1.7% last month as compared to 1.6% in March 2013, up beating the average forecast of 1.6% increase.
USD/HKD is posed for major retracement towards the 7.7635 resistance area. Buying the pair on a daily close above the trendline could be a good strategy. The initial target must not be less than 100 pips; the stop can be placed below the trendline.
To contact the writer of this story: Usman Ahmed at firstname.lastname@example.org