The US Federal Reserve bank will meet this week where market players are anticipating a 50 bps rate hike with a possibility of unveiling an in-depth balance sheet reduction. If the actual decision matches the expectation, it would be an aggressive bullish factor for the US Dollar. On the other hand, the EU policymakers showed interest in raising the interest rates after completing the bond-buying program, probably in July 2022.
Forex Technical Outlook for 02 May 2022 to 06 May 2022
The FOMC statement and Non-farm payroll would be the most significant event for this week. Besides, the AUD cash rate will come up on Tuesday, where a 15% rate hike to 25% would be a bullish factor for AUD. Moreover, the NZD and CAD employment would increase further volatility in most major and cross pairs.
The US Dollar Index has reached a level that was not visited before 2017. Therefore, the extreme bullish pressure on the US Dollar is already present in the market, where the upcoming rate hike might extend the momentum. In that case, the bullish pressure in the USDX may rise towards the 105.00 level until it shows strong exhaustion from the 2017 high.
The extreme selling pressure in the last 6 trading days and the intense selling pressure made a new low below the 1.0640 weekly support level, which is a clear sign of the liquidity grab from the fresh multi-year low. Whether it is a reversal or a continuation, investors should wait for a bullish price action before setting the actual direction. The weekly candle that made a 328 pips movement closed for trading with an insignificant wick on the downside. The last bullish candle of the Friday came with a lot of intraday volatility, which increases the possibility of the possible correction toward the dynamic 20 EMA on the daily chart.
The above technical analysis shows how the RSI level rebounded from the 30 levels, followed by the latest bullish daily candle after six consecutive selling days. Therefore, as the gap between the price and dynamic 20 EMA is higher, we can aim for a minor bullish correction in this pair, although the broader market direction will be bearish.
Based on the current price action, the price is more likely to move up towards the 1.0760 level from where the selling pressure may affect the continent. However, the bullish pressure above the 1.0936 supply level is the ultimate barrier for bears; above this level, bulls may extend the momentum toward the 1.1138 level above this level.
After breaking below the falling wedge pattern in the daily chart, GBP/USD made a further 3.32% loss in the previous week by creating a new 2022 low. In the weekly chart, the price has taken out the 21 September 2020 low and made a brand new swing level at 1.2411 level. However, the RSI moved below the oversold 30 level while the gap between the price and dynamic 20 EMA is extended in the weekly chart; it is a sign that bears have overextended the price below the 1.2677 supply level that needs a correction to complete.
This technical analysis shows how the selling pressure extended below the 1.2677 level, creating an opportunity for a possible bullish correction opportunity. Moreover, the mean reversion with the dynamic 20 EMA and a rebound in the RSI from the oversold 30 level indicates an additional sign of the possible buying pressure.
Based on the daily context, we aim the upcoming price action for GBPUSD as bullish toward the 1.2835 resistance level from where bears may resume the momentum. On the other hand, the break below the 1.2400 level might follow the path set by the higher US interest rate towards the 1.2257 level.
Although the US Dollar beats all significant currencies, AUD showed an exciting scenario for investors. The most recent aggressive selling pressure in AUD/USD that was started on 5 April 2022 came after creating a new swing high above the 0.7556 level. The bullish break of structure above the 0.7556 level and the current liquidity grab from 0.7092 to 0.7050 area indicate that bulls from 0.7020 to 0.6960 may attempt again to take the price up.
This technical analysis shows how the daily price of AUD/USD approaches the key demand area of 0.7020 to 0.6960, while the RSI is below the 30 level and the dynamic 20 EMA is 219 pips higher than the current price.
Therefore, investors should closely monitor how the price trades at the 0.7020 to 0.6960 area from where any bullish rejection with a daily candle above the 0.7050 would increase the bullish possibility towards the 0.7280 level. However, the current selling pressure is quite impulsive that needs closer attention to the intraday price action before aiming long in this pair. Moreover, the invalidation level for the possible buying momentum is 0.6960 level, where a daily close below this level would increase the bearish pressure towards the 0.6900 area.
The impulsive bullish pressure in the USD/JPY daily price formed a divergence with RSI for the first time since the beginning of 2022. However, the higher timeframe price action is still bullish, with the RSI above the overbought 70 level. In that case, the counter-trend momentum with intense exhaustion is important to see before aiming short in this pair.
The above technical analysis shows how the price made a new swing low above the 129.48 level by creating a demand zone at 128.11 to 127.96 area. Moreover, the dynamic 20 EMA is below the price while the RSI continued moving higher from the 70 level.
As the current bullish momentum is strong, any bullish rejection from 128.11 to 127.96 area would create a trend trading opportunity where the main aim would be to test the 132.00 psychological level. On the other hand, bearish solid exhaustion with a daily close below the 126.90 level would increase the bearish possibility towards the 125.18 support level.
Gold traded sideways for almost a month before grabbing both buy-side and sell-side liquidity from the rectangle pattern breakout. However, the weekly support at 1890 is still intact, which is the primary barrier for sellers.
This technical analysis shows how the daily price of XAUUSD trades below the dynamic 20 EMA after making a new swing low at the 1872.21 level. Moreover, the RSI level is below the neutral 50 areas with a pending test of the oversold 30 level.
Based on the current price action, XAUUSD may extend the selling pressure towards the 1821.97 demand zone after making a bearish daily close below the 1890.00 level. On the other hand, the current emerging trendline from the 8 March high to the 18 April high needs to be broken before showing a bullish pressure in the daily chart.
The current bearish pressure in the BTC/USD price awaits grabbing the sell-side liquidity below the bullish channel, where the 37196.50 to 34322.94 area would be a zone from where the reversal is likely to happen.
The short-term bearish pressure in the BTC/USD price is supported by the 30-day Market Value to Realized Value (MVRV) indicator that reached the -7.10 reversal area. However, the further downside pressure in the MVRV level to -10% to -15% would come with selling pressure at the BTCUSD price before any bullish reversal formation.
However, the number of Whales holding between 1K to 10K Bitcoin has increased to 2193 from 2044 on 24 February. Therefore, although the current selling pressure is potent towards the 34332.94 support level, the upside momentum may extend at any time.
This technical analysis shows how the price approaches the trendline support where grabbing liquidity from 37196.50 to 34322.94 is likely to happen. Investors should consider bullish rejection from this area where a daily candle above the dynamic 20 EMA may initiate an impulsive bullish pressure towards the 48096.47 level.
Overall, the global financial market awaits volatility from several market-moving events this week where the rate hike from the Fed would extend the bullish pressure on the US Dollar by taking EURUSD, GBPUSD, and AUDUSD prices down.