Forex Forecast & Forex Technical Outlook for 02 January 2023 to 06 January 2023

The brutal 2022 is over and investors are seeking a major recovery from the inflationary pressure. However, it is yet to be determined whether the global economy has entered into a recession or not. The recent US inflation data was supportive of the Stock market but in countries like the UK and Eurozone, 2022 was closed without any assurance.

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Forex Technical Outlook for 02 January 2023 to 06 January 2023

It will take time for the market to return to normal as it is the first week of the new year. Moreover, there are several significant releases pending for the week that can provide a clue about the coming trading days.

The first data for the week will be the US Job report, which will headline the economic agenda. The Flash inflation readings for Eurozone and Canadian employment report would highlight more about major currencies.

Before proceeding further, let’s see the list of economic events that a trader should focus on for this week:

• CHF CPI m/m on Wednesday
• ISM Manufacturing PMI on Wednesday
• JOLTS Job Openings on Wednesday
• FOMC Meeting Minutes on Wednesday
• ADP Non-Farm Employment Change on Thursday
• Canada Employment and Unemployment reports on Friday
• The US Nonfarm Payroll on Friday
• The US Average Hourly Earnings m/m on Friday
• The US ISM Services PMI on Friday

Let’s proceed with the weekly outlook with the DXY outlook:

The US Dollar Index (DXY) extended the loss and reached the 103.41 key support level from where bulls might gain some momentum. However, the medium-term outlook is still bearish, where any sign of an eased economy from the Fed meeting minutes could extend the loss towards the 101.30 level.

EUR/USD

The less trading volume due to the holiday season made trading ineffective for trend traders. The recent price action showed multiple indecision formations, where bulls were the ultimate winner.

 

This technical analysis of the EUR/USD shows a bullish trend continuation pattern as the recent price made a range breakout towards the upside.

On the other hand, it will be the beginning of a new year, where a corrective momentum towards the yearly trend could limit the long-term profit target. 

The dynamic 20 EMA is working as a support, while the current fixed range high volume level from November- December is below the price. The Relative Strength Index (RSI) is also supportive for buyers as it is hovering just below the 70% overbought area.

Based on the current context, the bullish trend continuation opportunity will be a profitable approach in this pair. However, investors should monitor how it retraces to the 1.0574 support level. A break below the 1.0574 level might change the current market structure and lower the price toward the 1.0400 level.

Let’s see the price levels to look at taking positions in the EUR/USD:

• EUR/USD support levels to look at: 1.0574
• EUR/USD resistance levels to look at: 1.0933.

GBP/USD

As per the previous weekly outlook, GBP/USD selling pressure was potent below the dynamic 20 EMA resistance level. As the last week faced less trading volume, the corrective momentum was extended, which need a breakout before forming a stable trend.

 

This technical analysis indicates how bullish momentum faded after a long bullish rally. The highest trading volume from the Nov-Dec peak is above the current price, while the 20 DMA is working as a confluence resistance.

The Relative Strength Index moved below the 50% level, after reaching above the overbought 70% level. 

Based on the current price outlook, bears have a higher possibility to take control of the GBPUSD momentum. Any intraday bearish setup could be an effective trading opportunity for this week. However, the selling opportunity is limited as long as the price trades below the dynamic 20 DMA resistance.

A strong upside pressure and a daily candle above the 1.2144 level would alter the current context and increase the price toward the 1.2488 resistance level.

Let’s see critical levels for GBP/USD this week:

• GBP/USD support levels to look at: 1.2000.
• GBP/USD resistance levels to look at: 1.2488.

AUD/USD

The effect of a lower trading volume is visible in the AUD/USD price, which ended the week with a corrective indecision formation. Now, investors might experience an extension to the volatile price action until the effect of the holiday season ends. 

 

This technical analysis indicates a corrective price action for the AUD/USD price. The broader daily structure is bearish, where the ascending channel breakout provided the primary sign of a bearish opportunity.

However, the last 4 days' price showed a rebound by holding the price above the dynamic 20 DMA, which can invalidate the previous bearish possibility. Moreover, the Relative Strength Index (RSI) started the move higher from the 50% neutral level, where the current aim is to reach the 70% zone.

For the coming trading days, investors should focus on finding the daily price below the 0.6697 high volume level, before going short in this pair. However, the current price outlook is bullish, which can extend the momentum toward the 0.6914 level.

Let’s see the critical levels to look at for the AUD/USD: 

• AUD/USD support levels to look at: 0.6697
• AUD/USD resistance levels to look at: 0.6914.

USD/JPY

The bearish trend continuation opportunity has become potent in the recent trading days as the current has a bearish leg pending to form a perfect bullish flag pattern.

 

This technical analysis shows a strong bearish possibility in the daily USD/JPY price as the current price is facing corrective pressure in the daily chart. The broader outlook is on the sellers' side as the price is trading below the fixed range high volume level from the December high to the low.

Moreover, the dynamic 20 EMA is above the price, while the Relative Strength Index (RSI) is heading toward the oversold 30% level.

Based on the current price outlook, the overall outlook of the USD/JPY will be bearish, where sellers may test the 126.37 support level in the coming days.

The alternative approach is to validate and break out from the descending channel which will increase the possibility of reaching the 140.00 area.

Let’s see important levels to look at for USD/JPY:

• USD/JPY support areas to look at: 126.37
• USD/JPY Resistance levels to focus: 134.44.

XAU/USD 

As per the previous weekly forecast, XAU/USD extended the buying pressure by moving higher by more than 200 pips. However, the current outlook could be an alarming sign to bulls as the price action has become corrective.

 

This technical analysis indicates how bulls are active in the price as the current price is stable above the fixed range high volume level. Moreover, the 20 DMA is below the price, while the RSI is ready to push higher toward the 70 levels.

However, the current price action is very corrective, which is moving within a rising wedge pattern. Therefore, close attention to the upside movement is needed before opening a long position.

As the current price is within the emerging wedge pattern, the bullish possibility is still solid towards the 1848.04 level. However, a bearish pattern breakout with a new high volume level formation above the current price would be a bearish signal, which can lower the price towards the 1720.00 level.

Let’s see important levels to look at for XAU/USD:

• XAU/USD support level to look at: 1800.00.
• XAU/USD resistance levels to look at: 1848.04.

BTC/USD

Bitcoin Whales holding 1,000 to 100K BTC can make a significant influence on the asset’s price through their activity in the network. Therefore, monitoring the transaction numbers from BTC whales work as a significant price director for the BTC/USD.

Currently, there are almost 10,000 whale transactions seen per day and experts believe that this number is a sign of further selling pressure on the BTC/USD price.

Investors with larger volumes are interested in two volume gaps from the $14,600 and $12,200.00 area. It is a signal that whales are accumulating orders from these areas, which can provide further upside momentum once the accumulation is over.

 

This technical analysis shows a selling pressure in the BTC/USD price as it is trading below the 16,850.00 high volume level. Therefore, the primary outlook for this instrument is to look for a short opportunity toward the 15,482.00 key support level.

The dynamic 20 EMA is working as a resistance level, while the RSI is heading towards the oversold area. Therefore, bulls need a strong momentum to take a position in this market behavior. A strong daily candle above the 17,059.00 level is the primary requirement to offer a long opportunity, toward the 18,547.65 level.

As it is the beginning of a new year, investors might experience a lighter trading volume. However, a proper tradable position will appear after the Nonfarm payroll release.

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