It is highly anticipated that the European Central bank will raise the interest rate by 50 bps this week, taking the rate to the positive zone for the first time since 2014. The rate hike sentiment came from the 50 bps hike in July, which unveiled ECB’s new Transmission Protection Instrument (TPI) or anti-fragmentation tool. Moreover, the central bank indicated that further rate hikes would come on a meeting-by-meeting basis.
In the Asian economy, the Reserve Bank of Australia hikes the interest rate for the fourth meeting, taking the headline rate to 1.85%. Moreover, there is plenty of room for the banks to raise the rate in the coming months.
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Forex Technical Outlook for 05 September 2022 to 09 September 2022
The week will start with the Reserve bank of Australia meeting, where a 50 bps rate hike may come. Moreover, the bank will disclose economic projections and plans to control the higher inflation. Bank of Canada and European Central will also meet this week, where rate hikes are possible from both of these continents.
The list of major economic events to watch for 05 September 2022 to 09 September 2022 is shown here:
- AUD Cash rate and Rate Statement on Tuesday
- ISM Services PMI on Tuesday
- AUD GDP q/q on Wednesday
- BOC overnight rate and rate statement on Wednesday
- Euro Main Refinancing Rate and rate statement on Thursday
- CAD unemployment rate and employment change on Friday.
Before moving to currency pairs, let’s see where the US Dollar index is heading:
The US Dollar index formed a bottom at 107.61 level from where a bullish Quasimodo pattern appeared within an existing buying moment. In that case, the bullish momentum may extend towards the 111.00 level until the price breaks below the 107.61 level with a bearish daily candle.
A perfect bearish trend should come with impulsive pressure and a bullish correction. Once the correction is over, bearish pressure should come with a strong change in trading volume.
The same story applies to the EUR/USD daily price as the recent bullish correction towards the 1.0080 level came with an extreme corrective momentum before the massive bearish daily candle last Thursday.
This technical analysis indicates how bears are aggressive in the daily EURUSD price. Based on the trading volume, the high trading volume from the August 2022 range is at the 1.0004 level, indicating a massive bears’ presence from the 1.0080 swing high.
The dynamic 20-day EMA reaches the 1.0080 level to provide a confluence resistance while the Relative Strength Index (RSI) is stable below the neutral 50% level.
Based on the EUR/USD forecast from 05 September 2022 to 09 September 2022, any intraday bearish opportunity might work as a trigger point of the broader bearish trend towards the 0.9800 level.
The buying possibility would be invalid if bulls appear and make a strong daily close above the 1.0080 level, which will open the possibility of reaching the 1.0203 level.
As per our previous forex weekly forecast, GBP/USD showed an impulsive selling pressure below the 1.1720 level by providing more than 200 pips movement.
The extreme selling pressure increased the possibility of testing the pandemic low 1.1411 level, which is more than 100 pips below the weekly closing.
This technical analysis shows how the selling pressure in the GBP/USD price came from the 1.1899 swings high with no considerable correction. The dynamic 20 EMA is more than 200 pips up from the Friday close, while the Relative Strength Index reached the oversold 30 level.
There are two scenarios for the GBP/USD price. The first is an immediate bullish correction, which may increase the possibility of joining the selling party targeting the 1.1411 level.
On the other hand, immediate selling pressure from the weekly opening would increase the possibility of showing a buying pressure from the 1.1411 historical level.
As per the previous AUD/USD forecast, bears took control over the price by making a daily close below the 0.6854 level, which changed the current sentiment as bearish for this week. In that case, any bullish correction towards the near-term supply zone would be a bearish opportunity, where the ultimate target is the 0.6683 swing low.
This technical analysis shows how AUD/USD bears made a fresh monthly low at the 0.6711 level, validating the 0.7000 to 0.6900 potential supply zone. Any bullish correction after the market opening towards the supply zone would increase the bearish opportunity.
The dynamic 20-day EMA is above the current price with a corrective momentum in the Relative Strength Index. The current RSI is below the 50 level, which increases the possibility of reaching the oversold 30 level.
Based on the current AUDUSD price prediction, the primary aim is to find the price at the 0.7000 to 0.6900 zone with a bearish rejection before aiming toward the 0.6683 level.
The alternative approach is to find an immediate selling pressure after the market opens, opening the possibility of a bullish correction from the 0.6683 level.
As per the previous USD/JPY forecast, bulls maintained pushing the price up with a 300+ pips gain by reaching the decade high. However, there is no sign of recovery in the daily chart, even after showing a mixed US employment report.
This technical analysis represents the daily USD/JPY price, which reached a level that was not seen since 1988. The dynamic 20 EMA is steady up, providing minor support, while the most recent high volume level from June- August zone is at 136.87 level, below the current price.
In the indicator window, the Relative Strength Index reached the 70.00 overbought zone, with a further possibility of extending higher.
In the USD/JPY price forecast for 05 September 2022 to 09 September 2022, the following psychological resistance is the 142.00 level, which would be the primary target of the bull run.
On the other hand, bears should find strong clues with a stable bearish daily candle below the 139.00 level before aiming toward the 135.80 level.
The bearish rally in the XAU/USD price extended as shown in the last week’s forecast, which provided a 492 pips profit from the weekly opening. However, this week’s situation is different as the price reached the 1697.00 to 1681.11 demand zone and showed a bullish reaction.
This technical analysis shows how a bullish rejection candlestick appeared from the critical demand zone, which indicates a possibility of a bullish correction. In the indicator window, the Relative Strength Index shifted its direction without testing the 30.00 level, while the dynamic 20-EMA is above the near-term high volume level of 1740.00.
Based on the XAU/USD price forecast, a minor bullish correction towards the 1740.00 level is pending until the price breaks below the 1681.11 level. However, the break below the 1681.11 level would open the room for testing the 1660.00 level.
Bitcoin showed a tight consolidation after showing a range breakdown on 26 August 2022. The selling pressure pushed the price to come below the 21,535.00 points of control (POC) level, where the highest trading volume since 2022 was seen.
However, investors showed less interest in the crypto market, which may result in another bearish leg in the BTC/USD price to the 17,609.99 level.
According to IntoTheBlock’s Global In/Out of the Money (GIOM) model, the immediate support level of $18,920.00 is weaker than the resistance at 23,629.00.
This technical analysis shows the daily price of BTC/USD, where the highest trading volume in August 2022 is at the 21,547.00 level, which is above the 20,554.76 immediate resistance. Moreover, the dynamic 20-day Exponential Moving average is below the static 20,554.76 resistance, representing more sellers' presence in the market.
Based on the BTC/USD weekly price prediction, the current aim is to test the 17,609.99 key support level in the coming days. On the other hand, a bullish recovery with a daily close above the 20,600.00 level would open a buying opportunity targeting the 24,000.00 level.
Although the US Dollar showed a correction after the mixed sentiment, the economic strength of the US is stronger than others. In that case, the US Dollar bulls might resume after providing a joining opportunity from the discounted price.