Most central banks think it is safe to begin stimulus during the slowdown in economic growth for major economies. However, policymakers are focusing on tightening the policy where the September job report may show a green line for taper in November. On the other hand, the Reserve Bank of New Zealand may press the rate hike button this week where the oil price is at a multi-year high and OPEC+ is under pressure to pump more oil in this week’s meeting.
New Zealand’s economy has shown a bounce back, but the uncertainty about the outlook with the lockdown imposed pushed the central bank to step back. RBNZ held off from raising the interest rate in the August meeting but indicated tightening the policy later on. The bullish expectation of this week’s rate hike on Wednesday would be a positive sign for NZD bulls, but the current position of US yield might offset the bullish movement.
The Federal has shown a sign of tapering in the November meeting where the clear decision would come from this week’s job number. Currently, the Non-Farm Payroll is expected to come at 500k in September, more than double from 235K in August. Moreover, the unemployment rate is expected to show a dip of 0.1% to 5.1%, while the month-to-month growth in average earnings may come at 0.4%.
Forex Technical Outlook for 04 October 2021 to 08 October 2021
Overall, the monthly shifting has been done where investors have experienced reversal price action due to the monthly profit-taking. Now the beginning of the new month may become meaningful with the releases like RBNZ rate decision, OPEC+ meeting, the US and CAD Nonfarm payroll.
In the US Dollar index, the price showed a strong bullish momentum last week, where the closing price was at a 2021 high. Therefore, we may expect a correction this week, but the overall sentiment may show the exact momentum after the Non-Farm Payroll release.
EUR/USD was extremely bearish last week where the price moved down with a sharp 100 pips down from 1.1700 to 1.1600 level. However, the selling pressure has become softer as the price found a bottom at the 1.1600 key support level. Therefore, as long as the price is nearing the 1.1600 level, it is more likely to show a bullish correction this week.
The above image shows that the EURUSD price is trading at the 1.1600 level, where last Friday’s candle closed with bullish pressure. Meanwhile, the gap between the dynamic 20 EMA and the price extended may initiate a correction this week. However, the overall trend is still down, and the MACD Histogram is bearish.
GBP/USD showed extreme bearish pressure last week where the price moved below the 1.3600 level with an impulsive bearish pressure. Now, the sharp 300 pips movement may need another attempt of institutional traders to see a new swing low below the 1.3400 level. Therefore, we may expect the price to increase and regain the bearish momentum from the 1.3700 level.
The above image shows how the price is trading at the 1.3500 area, where bulls attempt to recover the last week’s loss. Meanwhile, the MACD Histogram becomes corrective and approaches the zero level. In that case, we may expect the price to move up and test the 20 EMA as a dynamic resistance level. However, any bearish rejection from 1.3650 to 1.3700 would be another selling opportunity for traders with the target of 1.3400 level.
AUD/USD became volatile below the dynamic resistance, where the price bounced back after breaking below the 0.7200 key level. Therefore, investors may experience a bullish correction towards the 0.7423 level before the Non-Farm Payroll release. Moreover, the bullish possibility in NZDUSD from the rate hike will work as an influencer on the AUD/USD price.
The above image shows that the MACD Histogram squeezed to the zero level and aiming higher, which is a primary sign of an upcoming bullish pressure. In that case, investors should wait for a bullish daily close above the dynamic 20 EMA to consider the upcoming pressure is bullish. On the other hand, a break below the 0.7200 level with a bearish daily close may resume the current trend towards the 0.7117 area.
As expected, USDJ/PY moved higher to the 111.50 supply area and formed a regular divergence with the MACD. Therefore, the price moved down with a counter-impulsive momentum and closed below the 111.20 level. Therefore, as long as the price is trading below the 111.20 area, it has more room for downside pressure this week.
Bears may take the benefit from the monthly birth period and pre-NFP corrective momentum. In that case, the price is more likely to test the 110.00 key support level from where a bullish correction may continue.
XAU/USD showed an impressive bearish pressure that pushed the price to test the 1773.46 level as significant support from where the bounce back happened. Currently, the price is trading with a bullish momentum but still below the dynamic 20 EMA. Therefore, considering the recent bounce back from the 1773.46 level, the price may move to 1783.76 in the coming days.
The MACD histogram moved to the zero level in the indicator window with a hidden divergence in the price. However, the price is still below the dynamic resistance where any bearish rejection may resume the current bearish trend. Overall, we may experience a corrective trend until the Non-Farm Payroll release, where the XAU/USD may move sideways between the range of 1750.00 to 1790.00.
BTC/USD showed a strong recovery after finding a bottom at the 40800.00 level as significant support. The price tried to break below the 40800.00 level multiple times but failed. Therefore, a bullish recovery and a daily close above the dynamic level reversed the price momentum from bearish to bullish.
The above image shows how the price moved above 45000.00 level with a bullish daily close that opened room for further gain towards 52754.93 resistance level. However, extreme volatility with a bearish daily close below the 45,000.00 level may start a broader correction in the price.
Overall, investors may find a stable market momentum after the Non-farm payroll release where a US Dollar strength is highly predictable. Besides, this week, the RBNZ rate decision would be another key price driver that may influence Asian currencies to gain strength.