By resolving to suspend the debt ceiling until the end of 2024, Congress and the president successfully averted the first-ever default in U.S. history last week. Despite an unexpected increase in employment gains, contrary to market expectations, the overall data continue to indicate a gradual decline in economic activity.
On the other hand, the Canadian economy experienced an annualized growth rate of 3.1% in the first quarter of 2023, driven by increased household expenditure and robust exports. In contrast, Eurozone CPI data revealed that both headline and core inflation rates fell more than anticipated. The headline rate fell to 6.1% annually, while the core rate, which excludes volatile items such as food and petroleum, slowed to 5.3%.
According to the most recent Beige Book published by the Federal Reserve System, regional economies remained relatively stable during April and early May. However, there are indicators of a slowdown on the horizon, and certain industries are already experiencing a decline.
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Forex Technical Outlook for 05 June 2023 to 09 June 2023
The upcoming week will be dominated by policy decisions from the Reserve Bank of Australia (RBA) and the Bank of Canada, as the remainder of the agenda appears relatively light.
In the United States, the only significant event will be the publication of the ISM services PMI. As a result of the debt ceiling suspension preventing a default, the dollar may experience a weekly decline. Before these events, OPEC and non-OPEC nations are scheduled to convene on Sunday to discuss the possibility of further oil output cuts.
Let’s see the list of events to look at this week:
- CHF CPI on Monday
- ISM Services PMI on Monday
- AUD Cash Rate and Rate Statement on Tuesday
- AUD GDP q/q on Wednesday
- BOC Overnight rate and Rate Statement on Wednesday
- CAD unemployment claim on Friday
Let’s see the market outlook from the weekly forecast:
Bears are in control despite the monthly close in the EUR/USD pair. More downside momentum may come as the US Non-farm payroll beats analysts' expectations.
The downside pressure in the EUR/USD price has become potent in recent trading days. The price came below the 61.8% Fibonacci Retracement level from the 2022 slump. Meanwhile, the weekly price showed a strong downside momentum from technical indicators.
The price is trading below 100 and 20 Simple Moving Average levels, while some MA’s are flat, which signals the steepest recovery.
Regarding the daily price of EUR/USD- bears seem to be strong as the current Momentum Indicator shows a retreat at the 100.00 area. Moreover, the 14-day RSI is below the 50.00 line, which signals a bearish trend continuation opportunity.
In other indicators, there is a bearish crossover between 100 and 20 SMA at the 1.10810 area, which signals an additional confirmation of the downside pressure.
The bullish outlook of this pair is to look for a stable price above the 1.0810 area with a stable bullish D1 candle. Moreover, a sharp upward momentum may come if bulls can overcome the 1.0900 key psychological level.
On the downside, the ongoing selling pressure with a stable price below the 1.0700 level could lower the price towards the 1.0630 level. Further downside pressure might extend the loss toward the 1.0507 level.
Unlike EUR/USD, GBP/USD failed to make a new lower low in the daily chart with a valid price pattern to look for long trades.
This technical analysis of GBP/USD shows a valid falling wedge pattern breakout in the daily chart, while the broader outlook is bullish.
Before the Non-farm Payroll release, bulls controlled the GBP/USD price, which took the price above 100-day, 50-day, and 20-day SMA levels and the psychological 1.2500 mark.
In the indicator window, the 14-day RSI moved to the neutral 50.00 line and remained stable above it.
On the upside, the next level to look at is the 1.2578 level, which is the 9 May 2023 low. Above this level, a daily candle close could increase the price above the 1.2600 area. Further upward pressure could extend the gain toward the 1.2680 and 1.2754 levels.
On the downside, the latest Friday close showed some involvement of bears in the market, which can influence the price to test the 1.2434 event level. Below this level, a daily candle close could lower the price toward the 1.2325 level.
As per the last week’s outlook, AUD/USD completed the bullish correction but the current market outlook shows a potential bullish opportunity from the channel breakout.
This technical analysis of the AUD/USD indicates the bullish counter-impulsive momentum after the range breakout, which may end up with a false break with a sell-side liquidity sweep.
The current price is trading below the 50% Fibonacci Retracement level from 0.6817 high to 0.6459 low, which indicates that bulls have more room for upside.
The 14-day RSI recovered from the 30.00 line in the indicator window, while the current level is just below the 50.00 line.
Based on the AUD/USD price outlook, a new swing high formation above 0.66385 could open a long opportunity, where the main aim is to test the 0.6700 level.
The alternative approach is to look for sell trades if a bearish D1 candle closes below the 0.6570 level.
Bulls are in action in this pais, where a downside pressure came before the Non-farm payroll, but the week close came by, eliminating most of the loss.
This technical analysis shows how bulls are strong in this pair, where the current Relative Strength level is steady above the 50.00 neutral line,
The latest correction before the NFP showed the 138.43 level as a valid support level, from where bulls may regain momentum.
In the bullish context, the next resistance level is at 140.96, but above this level, bulls may fill up the inefficiency left on 10 November 2022.
On the downside, the broader outlook might be changed if a bearish D1 candle comes below the 138.00 or dynamic 20 DMA, which could lower the price toward the 133.70 level.
XAU/USD showed mixed momentum in the latest week, while bears were the ultimate winner, as shown in the latest forecast. Now 1935.00 to 1985.00 levels are very critical as breaking below or above this zone could create a stable trend.
At the beginning of the last week, XAU/USD bulls tried to push the price higher but failed to breach the 1985.00 key resistance level. As a result, bears took control of the wheel, where steep sell-side momentum was seen after the Non-farm Payroll release.
As per the current context, as long as the 1985.00 and dynamic 20 EMA work as resistance, bears are more likely to extend their presence in the market. In that case, the next support level is at the 1950.00 psychological level. Breaking below this level might push the price to test the 1930.00 and 1900.00 levels.
However, the long-term outlook is still potential for bulls while the current 20-week SMA is below the price, working as immediate support. Before anticipating a sharp fall, a weekly candle close below the 1935.00 level is needed.
Based on the current market structure, XAU/USD shows a mixed outlook. There are three consecutive bearish weeks, which could end up with a bearish exhaustion. However, a rebound and a stable price above the 1985.00 level are needed before continuing the long-term bullish rally.
Following the publication of a mixed US Nonfarm Payrolls report for May, the price of BTC/USD declined. Typically, a robust employment report is negative for Bitcoin in the near future. However, the deceleration in wage growth may make a difference and signal an impending economic recovery.
Similar to what was observed in April, the number of employment added in May significantly exceeded market expectations. However, the deceleration in annual wage growth contributes to a bearish outlook for the US Dollar index because it indicates a reduction in inflationary pressures.
Based on the D1 chart of BTC/USD, the price declined in response to the April employment report during the previous month. The better-than-expected data resulted in a price decline that persisted for the remainder of the month, and Bitcoin has yet to recover from this setback completely.
Considering that May payrolls also outperformed expectations by a significant margin, a similar reaction in the Bitcoin price could be anticipated in June. However, an important factor could alter this bearish outlook: wage growth deceleration.
Despite the impressive job creation numbers, annual wage growth in the United States slowed to 4.3% year-over-year. This makes it more difficult for the Federal Reserve to continue increasing interest rates, as this metric indicates that inflationary pressures are easing. Bitcoin is likely to benefit from a halt in the Fed's rate-hiking cycle.
The technical analysis of BTC/USD shows a strong bullish opportunity as bears are less likely to breach the 25,821.00 support level.
The current price is still below the dynamic 20 EMA, while the current RSI is flat at the 44.00 line.
Based on this outlook, a strong bullish D1 candle above the 20 DMA level might extend the upward pressure toward the 29,247.00 level.
Conversely, the bearish pressure with a daily candle below the 25,800.00 level could lower the price towards the 24,000.00 level.
After the NFP investor's sentiment is moved to central banks. The RBA and BOC will remain on limelight as any change in the interest rate could create a sharp price change.