The volatility in the forex market came from the mixed Non-Farm Payroll data where the employment change came at 467K, against the anticipation of 110K. Therefore, the US Dollar experienced an intraday gain against major currencies even if the unemployment rate rose by 0.1%. It is a sign that market participants have likely failed to find a clear price direction until the inflation report is released.
The grim picture of US inflation is expected to show this week, where economists believe that the CPI inflation report might show a rise on Thursday. However, there is a possibility of facing a relief from the month on month rate, which is expected to rise by 0.4%. Overall, investors' attention is towards how inflation affects the global economy while the supply-demand disruption is starting to ease. A further sign of relief from the rising inflation would indicate liquidity in the forex market, which is effective for traders.
Forex Technical Outlook for 07 February 2022 to 11 February 2022
The skidding US dollar awaits the January inflation report, where any negative result would eliminate the Non-Farm Payroll gain. For the Pound, the UK GDP growth number will be a key effect that has lost momentum since the rate hike. The kiwi might find a path from the RBNZ’s own survey on inflation expectation, though the earnings became slower.
The US Dollar index showed a bullish structure break by breaching the 96.92 key resistance level. However, bulls failed to hold the price above this level and rebounded lower to 95.47 area. The existing buying pressure that broke the resistance came from the 95.00- 94.65 demand zone that will be the potential buying zone for the US dollar index. Any bullish rejection from this zone with a daily close above dynamic 20 EMA might encourage bulls to make a new swing high above the 97.42 area. On the other hand, a break below the 94.47 level with a bearish daily candle might alter the current market context and initiate a bearish trend.
The broader market trend for the EUR/USD is bearish even if the price showed a bullish momentum last week, followed by a bullish channel breakout. The 350 pips gain from 1.1140 to 1.1480 showed buyers interest from mixed US and GBP data. Now investors should closely monitor how the price trades below the 1.1480 key resistance level to find the price direction.
This technical analysis shows how the MACD Histogram changed its direction from bearish to bullish while the price shot higher above the dynamic 20 EMA with an impulsive pressure. As the sentiment from the NFP failed to breach the 1.1488 level, any bearish daily candle below the 1.1430 would increase the selling pressure towards the 1.1300 level.
On the other hand, a bullish daily candle above the 1.1480 level would eliminate the broader bearish trend and higher the price towards the 1.1680 area.
GBP/USD initiated the week with a bullish sentiment but failed to extend the buying pressure above the 1.3628 level due to the hike pointing to the Pound dovish sentiment. However, the last daily candle closed bearish above the dynamic 20 EMA, where investors should remain cautious about finding the upcoming price trend.
This technical analysis shows that the MACD Histogram failed to hold the bearish sentiment and aimed higher to the neutral zone while the dynamic 20 EMA is still below the price.
Based on this structure, a bearish daily candle below the dynamic 20 EMA might extend the selling momentum where any bullish rejection from the 1.3433 support level would be a potential buying point with the target of 1.3700 area. However, a break below the 1.3433 level with a bearish daily close might extend the bearish pressure towards the 1.3267 level.
AUD/USD showed the example of a perfect technical price formation where the recent bullish channel breakout and new swing low indicated bearish opportunities for investors.
The above technical analysis shows that the price aimed higher from the 0.7000 key support level and formed indecision at dynamic 20 EMA and static 0.7150 level. Meanwhile, the MACD Histogram moved higher but remained below the neutral level.
In this context, the bearish market sentiment might extend as long as bears hold the price below the dynamic 20 EMA. In that case, the primary target of the possible bearish momentum would be towards the 0.7000 level. On the other hand, any dovish momentum from US CPI with a bullish daily candle above 0.7180 may extend the bullish sentiment towards the 0.7300 area.
The broader market direction for USD/JPY is bullish as the price showed multiple breaks of structure towards the upside. However, the recent price showed a corrective momentum where a break out might provide a clear price direction.
The above technical analysis shows that the MACD Histogram turned bullish and held the momentum while the current price is above the dynamic 20 EMA. The potential symmetrical triangle formation within the bullish trend indicates that any bullish pressure above the triangle resistance might increase the bullish momentum in the coming days.
Investors should find the daily candle above the 115.50 key level to consider the upcoming price pressure as bullish towards the 117.00 level. On the other hand, a break below the 114.20 level would initiate the broader correction to the price towards the 113.47 area.
XAU/USD bears failed to take the price below the 1780.00 key support level, allowing bulls to aim higher with a corrective structure. Therefore, the corrective structure after the latest FOMC bearish trend shows that bears may attempt again this week.
The above technical analysis shows how the MACD Histogram aimed higher while the dynamic 20 EMA worked as minor resistance. Moreover, the recent daily candles showed buying interest by forming wicks on the downside, representing a mixed sentiment for the price direction.
In this context, if the current price moved above dynamic 20 EMA, any bearish rejection from 1815.00 to 1830.00 would be a bearish opportunity to complete the emerging channel. On the other hand, a bullish daily candle above the 1830 resistance level may increase the price towards the 1850.00 area.
The latest bullish daily candle in the BTC/USD chart is a relief for crypto investors and HODLers, where the price formed a bearish channel breakout with static resistance violation. Therefore, any corrective pressure within the daily breakout candle may increase the buying pressure in the coming days.
The above technical analysis shows a new higher high in MACD Histogram with a bullish structure break above the 40,000.00 key level. In that case, the price will likely extend the bullish momentum towards the 52,193.00 resistance level in the coming days. However, a strong rebound and a daily candle below the 38,000.00 level might eliminate the current possibility and initiate a deeper correction to the price.
Overall, investors may experience a lighter week except for the US CPI release. Therefore, the best approach is to follow the broader market trend with intraday price action to find highly profitable trades.