After the encouraging updates on the easing inflation, the latest week provided an early look at key indicators for the month of July. This glimpse provided evidence of the labor market's gradual decline.
The burden within credit markets is palpable. The quarterly SLOOS report, which was released on Monday, detailed stricter lending standards and a gradual decline in loan demand during the second quarter. The report emphasized that rising credit costs prompted consumers to cut back on borrowing, diminishing lenders' risk appetite. In addition, a revised lending policy introduced by the Small Business Administration this week aims to expand small businesses access to credit.
Several central banks convened the week to evaluate their respective monetary policies. Representatives from G10 economies and emerging markets gathered to discuss current economic conditions and make decisions regarding interest rates. The outcomes varied, with some institutions opting for more stringent measures, others maintaining the status quo, and others opting for lower interest rates.
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Forex Technical Outlook for 07 August 2023 to 11 August 2023
Let’s see the list of events to look at this week:
- CNY CPY on Wednesday
- NZD Inflation Expectations q/q on Wednesday
- USD CPI on Thursday
- US Unemployment Claim on Thursday
- GBP GDP m/m on Friday
- US Core PPI on Friday
- Prelim UoM Consumer Sentiment on Friday
Let’s see the market outlook from the weekly forecast:
EUR/USD buying pressure came potent after the Non-farm payroll release as investors' sentiment has shifted from the US Dollar.
The weekly price of EUR/USD is trading above a crucial Fibonacci level, which may indicate a bullish trend continuation opportunity for the coming days.
The 61.8% Fibonacci retracement level from 1.0833 swing low to 1.1003 level is at 1.0975 level, which is above the current price. Meanwhile, the recent price shows a strong bullish reversal from the 20 Simple Moving Average level, supported by the 100 SMA. Other technical indicators show completeness to the bearish slope, which may result in a trend reversal.
In the daily chart of EUR/USD, a recent bullish recovery from the 100-day SMA seems promising to bulls, while the 200-day SMA remains steady towards the upside. On the other hand, oscillators have started moving higher, where the current Relative Strength Index (RSI) moved above the neutral line.
In the most recent price chart, the resistance is available at the 1.1050 level, below the other important one at the 1.1104 level. Therefore, a bullish recovery above these levels could offer a stable trend trading opportunity.
On the bearish side, investors should keep a close eye on the 1.1000 level, where a bearish D1 candle below this level could lower the price toward the 1.0830 area.
GBP/USD remained bearish throughout the week, but the latest Non-farm payroll provided an indication of the US Dollar’s weakness.
The daily price of the GBP/USD price shows a favorable position for sellers as the current price is still trading within the ascending channel. Moreover, the 100-day Simple Moving Average is strong support, currently at the 1.2575 level.
The 14-period Relative Strength Index (RSI) is still below the 50.00 neutral line, suggesting a corrective momentum for the coming trading days.
In the coming trading days, a downside movement is possible in this pair, where the main aim is to test the 1.2487 level before approaching the 1.2400 level.
However, the broader market direction is bullish, and a weekly candle close above the 50-day SMA could resume the existing trend. In that case, the current channel resistance could be broken, extending the upside pressure toward the 1.2850 level.
AUD/USD extended the loss in the previous week and showed a buyers’ presence after the NFP release.
In the previous week, AUD/USD bulls failed to overcome the 20-day EMA resistance and showed a sharp sell-off below the 0.,6593 support level.
The weekly candle closed bearish, with a clear liquidity sweep from the sellers' and buyers' sides. However, the price is still within a consolidation zone, from where a breakout is needed before showing an impulse.
On the daily price, an immediate bullish recovery is seen after the Non-farm payroll release, but the momentum is not strong enough to consider a trend change.
Based on this outlook, the downside possibility will remain until a daily candle closes above the 0.6650 level, targeting the 0.6800 level.
The alternative approach is to look for a downside opportunity if the price closes below the 0.6550 level with a bearish rejection from the 20 EMA.
The stable price was seen above the dynamic level, where bulls were the ultimate winner. However, a downside correction is pending where the structure is still bullish.
The Bank Of Japan took some action to strengthen the JPY but failed. However, a corrective price action was seen in the latest week, where more selling pressure may come in the coming days.
In the daily price, the current price is trading above the dynamic 20 EMA, while the 100-day SMA is working as a major support. Moreover, the 14-period Relative Strength Index (RSI) remains steady above the neutral 50.00 line, which is a sign of a strong bullish trend.
Based on the current market structure, any bullish rejection with a false break from the 20 EMA could be a buying opportunity, targeting the 144.00 level. However, a strong bearish candle below the 140.00 level could be a red signal for bulls, which can lower the price toward the 138.00 area.
XAU/USD remained sideways within the channel, where a strong breakout is needed before following the weekly bullish trend.
The current Relative Strength Index on the daily XAU/USD price remains below the 50.00 line, while the latest price action shows strong buying pressure after the Nonfarm payroll release.
On the daily chart, the current price is trading below the 20 EMA and 100-day SMA levels, which is a sign of an active seller’s presence in the market.
As per the XAU/USD weekly outlook, a stable price above 1950.00- 1955.00 is needed before forming a solid bullish trend. In that case, a buying possibility could open, where the main aim is to test the 1975.00 level. Moreover, a D1 candle above the 1965.00 level could flip the monthly candle with a strong bullish trend continuation opportunity.
On the bearish side, the 1920.00 static support level could be the immediate support level. A bearish D1 candle below this level could lower the price toward the 1910.00 level before moving toward the 1900.00 psychological level.
Bitcoin's current trading price is hovering near a six-week nadir not seen in the preceding two months. Following the publication of July's US Non-Farm Payrolls (NFP) data, the asset managed to maintain a price above 29,000, indicating a possible August price recovery.
The US NFP figures for July fell short of market participants' expectations, totaling 187,000, while the unemployment rate decreased to 3.5%. This change in macroeconomic conditions appears to be favorable for risk assets; however, the complete impact on the US Dollar's selling pressure remains to be seen.
After six weeks of consistent decline, Bitcoin's price is attempting a recovery toward the 30,000.00 threshold. Investors have anxiously anticipated a catalyst for the asset, such as the US Securities and Exchange Commission's approval of a spot Bitcoin Exchange Traded Fund (ETF). However, Bitcoin's ability to resume its upward momentum has been hampered by the persistent uncertainty surrounding US regulations and the regulatory assault on cryptocurrencies.
Despite difficulties in the DeFi sector and increased regulatory scrutiny on cryptocurrency exchanges, the US economy created 187,000 Non-Farm Payroll jobs in July.
The trajectory of Bitcoin's price over the past few months has been upward. However, a distinct breach below 27,700.00 would signal a possible shift toward a bearish trend.
The intersection of the 10-day and 50-day Exponential Moving Averages (EMAs) are spotted at the 27,300.00 level, representing a significant resistance point for BTC's price on the below-price chart.
After the Non-farm payroll, investors might expect a lighter week, where the CPI would be the main focus.