The combination of higher interest rates increased energy prices, and the fear of recession pushed central banks to get out of the eased monetary policies. In particular, the concern about possible recession is dragging the stock market down. Several economic data highlight the fears, like the latest job report in the US. Therefore, close attention to this week’s Non-Farm payroll is important to see whether there is a relief or not. In other economies, the RBA started hiking the rate at a faster rate of 75 basis points, where the current anticipation of an additional 50 bps hike is possible in this week’s meeting.
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Forex Technical Outlook for 04 July 2022 to 08 July 2022
The FOMC meeting minutes and European central bank’s policy meeting will provide a hawkish sentiment, while the Reserve Bank of Australia might deliver another 50 bps hike. On Friday, the Nonfarm payroll will come where the current expectation is to show 275K job numbers rather than the previous report of 390K. The weaker than previous job report might work as a bearish factor for the US Dollar that may remain intact until the news release.
The US Dollar index showed a strong rebound by forming bullish rejection candlesticks from the 104.00 psychological support level. In the coming days, the bullish outlook for this instrument is potent until it breaks below the dynamic 20 EMA with a bearish daily close. The primary target for the bull run will be towards the 106.00 level.
After excessive volatility, bears became stronger than bulls in the EUR/USD weekly chart, pushing the weekly close with an intense selling pressure. The Weekly RSI also pushed down and reached near the oversold 30 zone.
The above technical analysis shows how the daily candle formed a solid bearish rejection from the dynamic 20 EMA and pushed lower towards the key demand zone. The long-term market trend for this pair is bearish, where the multiple tests of 1.0412 to 1.0350 zones are not a good sign for bulls. As long as the current price trades below the dynamic 20 EMA, investors should monitor how it trades above the 1.0350 level in the coming days. It is the third time the price is visiting the 1.0412 to 1.0350 zone, where the possibility of grabbing sell-side liquidity available below the 1.0350 level is high.
In this context, the first scenario is to wait for a selling pressure below the 1.0350 level and rebound with a bullish daily candle above the dynamic 20 EMA, which will open room for testing the 1.0600 level. On the other hand, a minor bullish correction and bearish rejection from the 1.0530 to 1.0450 zone would provide a decent bearish opportunity toward the target of the 1.0300 level.
GBP/USD weekly chart shows a strong selling momentum as the price remains stable below the multi-year low. Although bullish exhaustion appeared from the 1.1934 level a week ago, bulls failed to make a bullish break of structure in the daily chart.
This technical analysis represents the GBPUSD daily chart where the current selling pressure came from the 1.2325 key resistance level. The broader market trend is bearish, while the dynamic 20 EMA is above the price, indicating that bears are in control. In the indicator window, the RSI failed to reach the neutral 50 level in the latest trading days, which is a sign of testing the oversold 30 level again.
As per the current price action, the long-term bearish trend for this pair is valid as long as the price trades below the 1.2325 key resistance level. However, last week’s closing price is still above the 1.1943 level, leaving a minor bullish recovery pending. In that case, any bullish rejection from the 1.1934 to the 1.2000 zone might increase the price towards the 1.2200 psychological level. On the other hand, the break below the 1.1934 level would be an alarming sign for bulls that might initiate the sell-side liquidity grab by testing the 1.1800 level.
AUD/USD bulls tried to make ground at the 0.6852 support level by forming a double bottom pattern. However, last Friday’s daily candle appeared with intense selling pressure, breaking below previous swing lows. As a result, the weekly RSI shifted its direction after testing the 50 level and moved towards the oversold 30 zone.
This technical analysis shows how the daily candle moved below the 1.6852 level and formed a bearish break of structure. However, the dynamic 20 EMA remained above the price while the RSI remained steady below the neutral 50 level.
Based on the current price structure, the AUDUSD market trend will remain bearish, although a bullish correction is pending. The RSI formed a divergence with the price while the key supply zone of 0.7070 to 0.7000 is yet to be tested, pursued by a trend line liquidity. In that case, investors may experience a bullish correction in AUDUSD where the current projection is to test the dynamic 20 EMA resistance in the daily chart.
The USD/JPY bullish momentum remained steady above the 134.55 support level while the dynamic 20 EMA approached higher. Therefore, as long as the price trades above the 20 DEMA support, the current bullish momentum may extend in the coming days.
The above technical analysis shows the daily chart of USD/JPY where the price remained corrective throughout the week. Although divergence formed with the RSI towards the sellers' direction, the price still trades above the critical daily support.
Based on the current price structure, the current bullish momentum might lose ground if the daily candle comes below the 134.55 key support level. In that case, the price may test the next support at the 130.80 level. However, on the bullish side, the current trend is still strong, where any bullish rejection from static 134.55 or dynamic 20 EMA would extend the current momentum towards the 138.00 level.
XAU/USD grabbed the sell-side liquidity by breaking below the trendline starting from the 16 May low to the 14 June Low and reaching the 1786.46 key support level. Moreover, the price showed a strong buyers’ interest from the 1786.45 support level by closing a bullish daily candle, followed by a double bottom pattern.
This technical analysis shows how the daily XAUUSD chart showed buyers' interest after reaching the 1798.87 to 1786.44 key demand zone. Moreover, the current bullish pressure may extend to grab the buy-side liquidity from the falling trendline, which started from June 2022 high.
Based on the daily chart, XAUUSD has a higher possibility of moving to the 1878.00 area in the coming days. However, the bullish sentiment is valid as long as the price trades above the 1786.00 swing low in the daily chart.
BTC/USD moved 56% down in Q2, showing its highest negative Q2 returns in the last 11 years. However, the price action of recent trading weeks shows an extremely corrective momentum where the 200-day moving average is at 22,500.00 area.
The bullish outlook of BTC/USD comes from its on-chain supply on exchange metric that shows the number of BTC holding on exchanges. In the last two weeks, the metric shows a drop from 1.94 million to 1.8 million, where the 7.2% decline indicates that investors are moving their investment off centralized platforms to reduce the sell-side pressure.
Moreover, the Bitcoin Net Unrealized Profit/Loss (NUPL) shows that a bottom is forming from the historical level. However, this on-chain metric shows that the market sentiment moved from greed to fear as soon as the price moved below the $30,00.00 level. However, the most recent selling pressure indicates that the sentiment moved from fear to capitulation.
This technical analysis shows the daily chart of BTCUSD, where the long-term trend is bearish, and there is no sign of a strong bullish recovery. The 20-day moving average is above the current price, while the RSI just kissed the oversold 30 zone.
Based on the BTC/USD daily chart, the existing selling pressure has a higher possibility of extending the bearish momentum where the primary aim is to test the 17611.82 bottom. However, the bullish recovery might extend the momentum if a strong bullish daily candle appears above the 23310.34 resistance level.
The US Dollar bulls might provide relief to the opposite party before the Non-farm payroll release. However, the current uncertainty from higher inflation and rate hikes would keep the intraday momentum volatile.