Forex Forecast & Forex Technical Outlook for 01 May 2023 to 05 May 2023

The US GDP grew by 1.1% in the first quarter, below expectations, although consumption data was positive. The fact that wage inflation increased more than anticipated, but consumer inflation rebounded only modestly. It is a sign that the fight against inflation continues. 

Numerous analysts and economists predict an imminent recession, causing the markets to oscillate between a gloomy global outlook and some encouraging earnings reports. The First Republic Bank crisis reignited the banking system's concerns, further complicating the situation.

Even against the U.S. dollar, the Euro has recently performed well despite the current uncertainty. It may be due to the Eurozone and Treasury yield spread, which reflects monetary policy expectations. The European Central Bank is anticipated to continue raising interest rates over the coming months. The Federal Reserve is also scheduled to raise rates for the final time on Wednesday.

Forex Technical Outlook for 01 May 2023 to 05 May 2023

Banking developments have also aided the Federal Reserve's efforts to tighten monetary policy. 

Traders will closely monitor the Fed's decision on Wednesday to disclose a final 25 basis point interest rate hike to 5.00%-5.25%. Fed Chair Powell's comments and the Federal Open Market Committee projections will influence future interest rate expectations. 

Powell is anticipated to confirm no discussion of rate cuts, but the market's focus will transition to the dot plots. If the projections include forecasts for rate cuts later in the year, US yields may decline, which could cause EUR/USD to reach new cycle highs.

Currently, according to the CME Group FedWatch Tool, the likelihood of a 25 basis point hike is 88%, up from 83% a week ago, with a 12% possibility of a pause.

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

• ISM Manufacturing PMI on Monday
• RBA Cash Rate & Rate Statement on Tuesday
• JOLTS Job Openings on Tuesday
• NZD Unemployment Rate on Wednesday
• ADP Non-Farm Employment Change on Wednesday
• ISM Services PMI on Wednesday
• Federal Funds Rate & FOMC Statement on Wednesday
• EUR Main Refinancing Rate & Rate Statement on Thursday
• US Non-Farm Payroll on Friday
• CAD Employment m/m on Friday

Now move to the weekly price forecast:

EUR/USD

As per the previous weekly forecast, the bullish trend continuation pattern provided more than 100 pips to bulls with a new swing high formation. Although the price showed a rebound last Friday, the buying possibility is still intact.

This technical analysis shows the first sign of a bullish pressure from the break of structure at the 1.1076 swing high. After making a new swing high, the price went sideways, but the momentum is stable above the high volume level.

As per the high volume indicator, the most active trading since 15 March is at the 1.0963 level, which is just below last Friday's close. Moreover, the dynamic 20-day Exponential Moving Average is below the current price, aimed higher, while the current RSI is stable above the 50% neutral zone.

In the trading approach of EUR/USD, investors should focus on finding bullish trading opportunities from the 1.1027 to 1.0917 area, which can increase the price towards the 1.1200 level.

On the downside, the valid order block is at the 1.0877 to 1.0830 area, which came with a valid Imbalance formation. Therefore, the downside correction may extend toward the 1.1830 level but breaking below this level could violate the bullish structure at any time.

GBP/USD

In the previous week, GBP/USD extended its bullish pressure by providing more than 130 pips to bulls. Moreover, the new yearly high formation with a strong bullish weekly close could offer more buying opportunities in the coming days.

This technical analysis of GBP/USD shows strong buying pressure in the daily chart. This instrument's new bullish break-of-structure above the 1.2545 level provided the first sign of buying pressure.

Moreover, the recent high volume level shows buying pressure by moving below the current price. The dynamic 20-day EMA is working as a confluence support to the current high volume level, while the RSI is strongly bullish above the neutral 50.00 line.

As the current market trend is bullish, it is wise to look for long opportunities after a considerable correction. The primary trading approach is to wait for the price below the 50% Fibonacci Retracement level from 1.2585 high to 1.2386 low. Later on, any bullish rejection from the 1.2486 to 1.2386 area could offer a decent long opportunity.

The existing bullish pressure in the previous week left the 1.2432 to 1.2386 area as a valid order block, which would be the last hope for bulls. A break below the 1.2380 level with a daily candle could eliminate the bullish structure and lower the price toward the 1.2300 area.

AUD/USD

The current price structure of AUD/USD is corrective, but the broader outlook shows a possibility of a high probable trend formation. However, the price made a new daily low last Friday and an immediate recovery might offer a bullish range extension opportunity.

This technical analysis of AUD/USD shows a potential bullish trend trading opportunity, starting from the break-of-structure formation at the 0.6792 level. Later on, sell-side liquidity sweeps are seen at 0.6620 and 0.6591 levels, while the 0.6563 low is protected.

The dynamic 20 Day EMA and high volume level in the main price chart are above the current price. Moreover, the current Relative Strength Index (RSI) is below the 50.00 line. As these technical indicators show sell signals, a stable bullish breakout is needed before opening a long position.

In the bullish trading approach, an immediate recovery with a daily candle close above the 0.6641 level could increase the price towards the 0.6700 level, from where a downside pressure might come.

On the other hand, any failure to overcome the 0.6641 level could be an alarming sign to bulls, which may violate the 10 March 2023 low, forming a stable bearish trend.

USD/JPY

USD/JPY provided a perfect example of how an order flow forms in a trading instrument. After forming a strong consolidation, the bulls regained momentum and shot higher by providing a 250 pips gain in a single day. However, the strong buying pressure lest an imbalance, which needs to fill up before forming another higher high.

This technical analysis shows how strong buying pressure influenced bulls to test the 137.00 to 136.43 order block. As a result, a strong gap formed between the price and the dynamic 20 DMA, which is a sign of a potential downside correction.

The buying pressure in the indicator window is still valid, as the RSI has yet to test the 70% overbought level.

As the immediate buying pressure reaches a potential supply zone, we may expect a downside correction to some after the weekly opening. This instrument's ideal bullish continuation opportunity is to look for long opportunities from the 134.98 to 133.00 area.

A break below the 133.00 level with a bearish daily candle could lower the price toward the 129.60 support level. 

XAU/USD 

XAU/USD passed a corrective trading week, backed by a strong bullish trend. It is a primary sign of a strong buyers' presence in the market, which may regain momentum after a perfect sell-side liquidity grab.

This technical analysis indicated the daily price of XAU/USD, where the current price is sideways. It is a sign that bulls are indecisive about the price, but as the broader outlook is bullish, it is wise to rely on buyers' side.

The dynamic 20 DMA and RSI are flat, signaling a sideways market. Moreover, the recent price is still trading between the 2014.87 high and to 1969.00 low, which needs to be violated before forming a stable trend.

The first bullish approach is to look for bullish rejection from the 1974.00 swing low, which may extend the range towards the 2014.00 level. Moreover, a bearish pressure below the 1969.00 level with an immediate recovery would work as a strong buy signal, targeting the 2050.00 level.

BTC/USD

Currently, the Bitcoin price lacks bullish momentum and has not yet breached a crucial psychological level in the first quarter of 2023. As two significant macroeconomic events approach, speculators will likely position themselves in accordance with the most likely outcome.

Federal Reserve decisions have substantially impacted the historical correlation between the S&P 500 and Bitcoin. The correlation peaked in January at 0.87 and has since decreased to 0.36 in April.

The Fed is anticipated to increase interest rates by 25 basis points in the second quarter of 2023, from 5% to 5.25%. A deviation from this plan with a larger rate hike would be a hawkish posture, resulting in a stronger US dollar and a decline in the value of both the stock market and Bitcoin.

Given the potential volatility that this macroeconomic event could bring, investors should trade Bitcoin with caution the following week. Additionally, the employment report or Nonfarm Payrolls (NFP) on May 9 and the Inflation rate on May 10 are events to watch, as they could also cause market volatility.

BTC/USDT price showed a bullish recovery with a false break at the 27,118.51 level, which provided the first sign of possible buying pressure.

The daily candle is still below the 30,000.00 level, which needs to be violated before forming a strong bullish trend. However, the dynamic 20-Day Exponential Moving Average is below the price, and RSI is bullish above the 50.00 level.

On the downside, an immediate recovery with a bearish daily close below the 20 EMA could increase the possibility of testing the 26,400.00 level.

As it will be the first trading week of May with a lot of high-impact releases, investors might expect a higher volatility, which needs attention to the trade management. 

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