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Forex Forecast & Forex Technical Outlook for 01 January 2024 to 05 January 2024

Forex Forecast & Forex Technical Outlook for 01 January 2024 to 05 January 2024

In the final week of 2023, the general perspective of the US economy appears favorable. There is no indication of inflation moderating, consumer spending remains consistent, the housing market is experiencing recovery as a result of reduced mortgage rates, and employment expansion remains prevalent at the national level.

Although 2023 is coming to a close, central banks have experienced a productive year and show no signs of slowing down. Policymakers from Asia and Latin America gathered last week to deliberate on interest rates and the prospective course of monetary policies.

Numerous households across the globe are currently confronted with the formidable task of effectively managing interest payments on a multitude of obligations amidst the escalation of interest rates. This trend of interest expenses increasing faster than disposable incomes is anticipated to continue into the new year, presenting difficulties for many main advanced economies.

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Forex Technical Outlook for 01 January 2024 to 05 January 2024

Let’s see the list of events to look at this week:

  • ISM Manufacturing PMI on Wednesday
  • JOLTS Job Openings on Wednesday
  • FOMC Meeting Minutes on Wednesday
  • German Prelim CPI m/m on Thursday
  • ADP Non-Farm Employment Change on Thursday
  • CAD Unemployment Rate on Friday
  • Non-Farm Employment Change on Friday
  • ISM Services PMI on Friday

Let’s see the market outlook from the weekly forecast:

EUR/USD

As per the previous EUR/USD outlook, the price advanced higher above the double-top high and grabbed buy-side liquidities. However, investors might expect a clear picture, which might come after releasing sufficient economic releases.

EURUSD

In 2023, the EUR/USD pair traded based on market sentiment, starting from the 1.0700 level and closing the year above the 1.1000 psychological level. The broader market outlook benefits the Euro, as the monthly chart shows a stable market above the 20 SMA.

On the other hand, the 100-day SMA remained sideways, where the current dynamic resistance is at the 1.1250 level. However, the price failed to make a stable market above the 1.100 level, where more clues are needed before anticipating a trend continuation.

Investors might expect a trend continuation in the weekly chart as the current price looks comfortable above the 20 and 100 SMAs. Other technical indicators grabbed upward traction, showing an upward slope from midlines.

Based on the weekly EUR/USD outlook, the price could advance towards the 1.1470 resistance level. However, the US Dollar could regain momentum at any time, which could lower the EUR/USD price below the 1.0700 psychological number.

GBP/USD

The GBP/USD pair encountered substantial volatility over the course of 2023. However, the pound sterling maintained its ascending trajectory from the initial half, culminating in a 15-month high of 1.3142. In contrast, the US Dollar could not sustain its ascent, leading to a year-long gain of more than 5.0% for the GBP/USD pair. With 2024 at hand, the issue remains whether the British Pound will be able to maintain its recent gains against the US Dollar.

GBP/USD

In the monthly GBP/USD chart, the GBP/USD price moved within a consolidation after having a buying pressure above the 1.1800 level. However, the price failed to move above the 50-month moving average, which acts as a near-term resistance level. 

The monthly RSI suggests a bullish trend continuation as an upward continuation is visible above the 38.2% Fibo level, which is at the 1.2070 level. 

On the bullish side, Pound Sterling bulls might have a stable trend above the moving above 50 and 100-month Simple Moving Average levels before reaching the 1.3500 psychological level. 

On the bearish side, the 505 Fibonacci Retracement level from the long-term swing is at the 1.1800 level. In that case, a stable bearish market below this level could be a decent short opportunity targeting the 1.1414 area.

Based on the current outlook of GBP/USD, the price might struggle to make a stable market on both sides. However, the broader market context is bullish, and any sufficient downside correction could be a long-term potential opportunity. 

AUD/USD

As per the previous AUD/USD outlook, the buying pressure remained intact as the most recent consolidation at the premium zone suggests buyers’ interest in the market.

AUD/USD

In the weekly chart of AUD/USD, a fresh bull run is visible as the current price is aimed higher from the descending channel breakout. Moreover, the price made a decent correction at the channel resistance before making a new high, which indicates further buying pressure in the coming weeks.

The double top level in the daily chart is marked at 0.6896, indicating sufficient buy-side liquidity. Moreover, the 20-day EMA suggests upward traction with an overbought RSI. In that case, any immediate bullish pressure above the 0.6896 level with an immediate rebound could be a short opportunity in this pair.

On the other hand, an immediate bearish correction towards the dynamic 20 EMA could be a strong bullish opportunity, which could make a stable market above the 0.6896 level.

USD/JPY

The upward momentum in the USD/JPY price became limited as the price failed to make a V-shape recovery with a stable market above the dynamic 20 EMA. However, the monthly and yearly shifts have appeared, which might indicate a corrective price action ahead.

USD/JPY

In the USD/JPY outlook, the weekly price suggests a bearish trend continuation as the recent candle moved down with a bearish inside bar formation. Moreover, the recent price moved below the 20-week EMA with a high volume level formation at the top, which could work as a confluence bearish factor.

In the daily chart, the recent 14-day Relative Strength Index (RSI) moved to the oversold zone, suggesting a pending bullish correction in the market. However, the dynamic 20-day EMA acts as a near-term resistance, which could limit the bullish trend extension.

Based on the weekly outlook of USD/JPY, a bearish continuation could lower the price towards the 137.64 support level. On the other hand, an immediate bullish rebound with a stable market above the 144.94 level could rebound the price towards the 150.00 level.

XAU/USD

Following a significant upswing in the fourth quarter of 2022, the cost of gold experienced an additional surge in early 2023. Despite significant gains in March, the XAU/USD pair encountered a corrective phase during the third quarter before ascending to a fresh all-time high in early December, surpassing $2,100.

In the run-up to 2024, gold is exposed to a dual threat. The XAU/USD's trajectory in the coming year may be significantly impacted by global economic conditions, geopolitical shifts, the monetary policy decisions of the Federal Reserve, and all three.

XAU/USD

In the weekly XAU/USD price, the upward bias could remain intact into 2024. The current weekly RSI is above the 50.00 line, while the bullish continuation is visible with the 20 EMA.

The Gold price reached the interim resistance at the 2060.00 level, which is the 161.8% Fibonacci Extension level from the near-term swing. Therefore, a stable market above this number could extend the buying pressure above the 2125.00 to 2150.00 level. Above these levels, the next target area could be the 2200.00 level, which is a strong psychological number.

On the bearish side, the 1973.34 level would be the crucial area to look at as a bearish D1 candle with a stable market below this number could extend the loss towards the 1900.00 area.

BTC/USD

The BTC price has deviated from conventional economic determinants such as interest rates and inflation in the year 2023. The price was impacted by the resolution of the FTX case and the guilty plea of Binance's CEO to money laundering. Although these occurrences caused disorder, three significant factors established the course of Bitcoin's path in 2024:

  1. BTC performance in Q4: Historically, Bitcoin performed exceptionally well in the fourth quarter. In 2023, the price increased by more than 160%, with October being the peak month.
  2. Bitcoin ETFs: Market exhilaration was generated due to the heightened anticipation generated by anticipated approval dates spanning from January 5 to 10.
  3. Bitcoin Halving: This event, scheduled for April 2024, may spark the beginning of the subsequent bullish cycle.

The volatility of Bitcoin was evident in its reduced sensitivity to macroeconomic indicators, such as changes in Federal Reserve policy and US inflation. As a result of lower interest rates, Bitcoin experienced an increase in appeal, which was consistent with Fed Chair Jerome Powell's indications of rate cuts.

The continued focus was on the potential approval of spot Bitcoin ETFs. Between January 5 and 10, analysts anticipated SEC approval, which could potentially facilitate substantial institutional investment. SEC concerns regarding investor protection and market manipulation persisted, however.

The forthcoming Bitcoin halving event elicited a range of reactions. Analysts made forecasts regarding price levels, whereas miners voiced concerns regarding diminished mining rewards and escalating operational costs, which may encompass tax increases.

The authorization of Bitcoin ETFs may generate billions of dollars in fresh capital, thereby bolstering the liquidity and stability of the market. In addition, it could increase Bitcoin's regulatory acceptability and recognition, thereby encouraging the adoption of cryptocurrencies on a larger scale.

BTC/USD

In the daily chart, the BTC/USDT price remained sideways within a bullish pennant pattern, where a breakout with a daily candle above the pennant resistance could extend the buying pressure at the 50000.00 resistance level. However, a downside pressure with a solid bearish D1 candle below the 38360.27 level could initiate a consolidation.

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