The Fed Chair signalled that his central banks would like to accelerate the pace by withdrawing liquidity from the system. Moreover, he downplayed the Omicron and put special attention to the intensified inflation risk. Currently, the US inflation is rising while the job market is healing. As a result, the Fed is preparing to hit a brake on the overheating economy. Powell suggests that it might be the right time to end the asset purchase program that will open rooms to raise the interest rate sooner.
The Nonfarm payroll came more than half of the expectation while the unemployment rate remained stable at 4.2%. Now, investors should closely monitor how the CPI is coming this week. The monthly CPI was increased by 0.9% in October, and considering the similar growth, the November number would arrive at 7% from the current 6.2%.
On the other hand, the Reserve Bank of Australia will meet this week where no significant change is expected. Therefore, the movement of the AUD might depend on any sign of future movement. Considering the slowdown in China, bearish sentiment is pending in the AUD against other currencies. On the other hand, the story in Canada is different. The economy is booming while inflation is scorching hot. Moreover, the job market recovered fully, and businesses have become optimistic. Therefore, this week’s meeting might include a hawkish tone regarding the Canadian economy while the only concern is the current bearish pressure in the Oil price.
Forex Technical Outlook for 06 December 2021 to 10 December 2021
The week will kick in with the AUD interest rate decision on Tuesday, where a dovish tone is likely to come. Moreover, the Bank of Canada press conference and US CPI would make the week eventful.
In the US Dollar index daily chart, the price remained corrective below the yearly high of 96.92, where the dynamic 20 EMA acted as a support to the price. Therefore, a break below 95.44 would indicate sellers’ presence in the US Dollar, while a break above 97.00 is highly possible. In that case, the next resistance level is at 97.80.
EUR/USD bears failed to hold the momentum below the 1.1187 swing low from where a solid bullish daily candle appeared. Later on, bears tried to regain momentum but could not achieve it by consecutive higher lows in the price chart. Although the current price faces resistance from the dynamic 20 EMA, a bullish breakout above the 1.1373 would increase the bullish possibility in the coming days.
The above image shows how the price formed higher lows in the price where the MACD Histogram turned bullish and aimed higher. Therefore, based on the daily context, any bullish breakout with a daily candle above the 1.1373 would be a decent buying opportunity in this pair with the target of 1.1600 level. On the other hand, a significant rejection from the dynamic 20 EMA with a daily close below the 1.1266 would eliminate the current bullish pressure.
GBP/USD disappointed bulls by breaking below the 1.3260 support level with a bullish daily candle. The price tried to move up by forming a bullish rejection from the static support but failed. However, the bullish possibility is still active as the current price is trading within a Wedge pattern.
The above image shows how the price formed a hidden divergence with the MACD Histogram while the gap between the dynamic 20 EMA and price is expanded. Therefore, any bullish breakout above the Wedge pattern would be a decent buying opportunity in this pair. On the other hand, a break below the 1.3200 level may invalidate the current setup and open rooms for testing the 1.300 area.
AUD was one of the major losers last week where the price reached the 0.7000 level with an impulsive bearish pressure. As the price found a bottom at the 0.7000 level a bullish correction is pending where the overall market direction is still bearish.
The above image shows how the price moved below the 0.7165 level with massive selling pressure and opened a gap between the price and dynamic 20 EMA. Moreover, the MACD Histogram remained below the neutral zone but aimed higher. In this context, any intraday bullish pressure at the 0.7000 area would be a short-term buying opportunity in this pair. However, the bearish possibility is valid as long as the price trades below the dynamic 20 EMA.
USD/JPY bears are active and pushed the price below the dynamic 20 EMA with an impulsive bearish pressure. As a result, the bullish possibility towards the 116.00 level became invalid as the price moved below the 113.76 event level.
The above image represents how the price was corrective below the dynamic 20 EMA and pushing lower. Meanwhile, the MACD Histogram showed an NPN formation where the recent bearish Histogram is aiming lower. In that case, a break below 112.72 has a higher possibility of taking the price lower towards the 110.82 area. However, the bearish option is valid as long as it trades below the 113.76 event level. Any selling pressure from 113.00 to 113.76 would be a potential selling opportunity in this pair.
XAUUSD found the demand zone at 1760.47 area and showed a buying interest with a bullish daily candle. Therefore, the XAUUSD is likely to face institutional interest from the demand zone. In that case, the bullish possibility towards the 1850.00 is intact for the coming days.
In the above image, the MACD Histogram remained bearish but aimed higher, indicating buyers’ presence in the price. Therefore, any intraday bullish rejection would be a decent buying opportunity in this pair, which is valid until the price breaks below the 1760.00 level.
The BTCUSD showed a massive selling pressure during the weekend that pushed the price below the 53,628.60 support level. The intense selling pressure opened room for testing the 40728.80 support level in the coming days.
Investors should monitor how the daily candle closes below the 53,628.60 support level. Any bearish daily candle with exhaustion may rebound the price higher. However, the bearish sentiment is valid as long as the price trades below the 53,628.60 support level.
Overall, this week will indicate how the US CPI is heading from the overheating situation. If the November CPI comes higher than the previous report, we can expect the US Dollar to lose its momentum against other currencies.
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