The December CPI for the Eurozone yielded contradictory results: nominal inflation increased to 2.9% annually, while core inflation fell to 3.4%. Given the Eurozone's sluggish expansion and subdued price increases, it is probable that the ECB will choose to reduce interest rates during its April meeting.
The minutes of the FOMC's meeting in mid-December reveals a dedication to a restrictive stance, although the committee does recognize the potential for interest rate reductions in the event that recent advancements in inflation endure. Despite the market anticipating rate reductions, the timetable of such measures did not generate significant debate.
In the final week of December, the Adjusted National Financial Conditions Index (ANFCI), which the Chicago Federal Reserve uses to measure financial conditions associated with inflation and economic activity, fell to -0.51. This indicates that financial conditions were less stringent than average.
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Forex Technical Outlook for 08 January 2024 to 12 January 2024
Let’s see the list of events to look at this week:
- CHF CPI m/m on Monday
- AUD CPI y/y on Wednesday
- BOE Gov Bailey Speaks on Tuesday
- US Core CPI m/m on Thursday
- CNY CPI y/y on Friday
- The UK GDP m/m on Friday
- The US Core PPI m/m on Friday
Let’s see the market outlook from the weekly forecast:
As per the previous weekly outlook, EUR/USD continued moving down as a correction to the broader bullish trend. However, the bearish reversal has not formed, and investors might expect the bullish trend to continue.
In the weekly EUR/USD candlestick pattern, an inverted hammer candlestick formation at the resistance level is seen with a new low formation. As the hammer-driven price action already made a selling pressure a bullish rebound is possible.
In the daily chart, the overall market momentum suggests an upward continuation, as the recent price went sideways at the ascending trendline support. Despite the upbeat US Data, investors showed reliability on EUR, leading to the volatile trading day before the week closes.
The dynamic 20-day EMA is closer to the current price, while the 14-day RSI is neutral at the 50.00 line.
Based on this outlook, a bullish daily close above the 1.1010 static level could increase the price towards the 1.1274 level. The alternative approach is to wait for a stable bearish break from the channel support and form a consolidation, which could lower the price towards the 1.0724 support level.
In the previous weekly Outlook, the GBP/USD price continued pushing down as a bearish correction. In that case, investors might need more clues before anticipating a bearish reversal.
In the weekly GBP/USD price, a bullish two-bar reversal with several indecision formations indicate that bulls are holding the price at the multi-week high.
In the daily chart, a bullish reversal with a stable candle formation above the 20-day EMA suggests an active buying pressure in the market. Moreover, the 14 days RSI showed a bullish slope from the 50.00 line, suggesting a stable bullish pressure.
Based on this outlook, a daily close above the 1.2827 would indicate a strong trend trading opportunity, targeting the 1.3142 resistance level. On the other hand, the possible Head and Shoulders formation could be validated after breaking below the 1.2610 neckline support. In that case, a strong bearish pressure might come, targeting the 1.2372 support level.
In the previous week, AUD/USD continued pushing down as a correction to the broader bullish trend. Like EUR/USD and GBP/USD, this pair did not show enough evidence to consider a trend reversal.
In the AUD/USD weekly chart, a corrective candle at the top with a bearish impulsive close suggests a selling pressure in the market. Moreover, the existing weekly trend is bearish from where the downside trend continuation could be potent for reaching the 0.6400 psychological level.
In the daily AUD/USD price, the Non-farm Payroll report pushed the price higher and closed near the 20-day EMA level after making a new weekly low. As the recent price failed to make a stable market above the 20-day EMA level, the downside possibility is potent for this pair.
Based on this weekly outlook, a bearish daily close below the 0.6641 level could offer a high probable bearish opportunity, targeting the 0.6358 high volume level.
On the other hand, an immediate bullish recovery with a stable market above the 20 EMA could extend the price toward the 0.7000 area.
In the previous USD/JPY outlook, the price failed to make a new low and formed an immediate rebound with a counter-impulsive momentum.
In the weekly USD/JPY outlook, a bullish engulfing candlestick formation suggests a strong market reversal, which could be a primary long signal for the coming week.
In the daily chart, the latest price showed a strong bullish daily candle above the dynamic 20 EMA last Thursday. Later on, the post-NFP driven sentiment failed to form a stable price action,, and closed with an indecision candlestick. Moreover, the Relative Strength Index (RSI) showed a bullish reversal from the 30.00 line, which suggests a possible bullish reversal.
Based on this outlook, a bullish trend continuation could increase the price toward the 148.00 psychological level. However, an immediate bearish reversal is possible where a bearish D1 candle below the 143.00 level is needed before anticipating the 140.24 level.
The market was subdued on Tuesday, gradually recovering from the prolonged weekend. After its recent poor performance in the final weeks of 2023, the US Dollar (USD) demonstrated a technical recovery, causing XAU/USD to close the day in negative territory.
The Relative Strength Index (RSI) shows a buying pressure as the current level is at the 60.00 level after the Nonfarm payroll release. In the near-term price action, the 2060.00 level could be a crucial static level with a confluence resistance from the daily pivot. In that case, investors might expect a strong bullish trend continuation opportunity after violating this line.
Moreover, the dynamic 20-day EMA is the immediate support, with an upward slope, which could be the immediate support to look at.
On the bearish side, the 2040.00 level would be a strong support. A bearish daily candle below this level could lower the price towards the 2020.00 to 2015.00 area, before visiting the 2000.00 psychological level.
Amidst the anticipation of the SEC's decision, trading activity has decelerated from January 5 to 10. The prices have already reflected the initial enthusiasm surrounding it, leaving traders in anticipation of the conclusive decision that will determine the trajectory moving forward.
A prominent crypto investigator argues that although the short-term impact of the ETF is frequently overestimated, its long-term influence is frequently underestimated. While maintaining the belief that the product has the potential to enhance the long-term health of the system, he does not anticipate significant imminent capital inflows.
Based on the current context, the forthcoming decision regarding the spot BTC ETF has played a crucial role in propelling Bitcoin's price in 2023 from 25,000.00 to its present range of 44,000.00, representing an approximate 50% increase.
Technical indicators such as the upward-sloping Relative Strength Index (RSI) and the strengthening Average Directional Index (ADX) indicate that Bitcoin is gaining momentum. On the Awesome Oscillator (AO), the existence of green histogram bars indicates optimistic momentum in the Bitcoin market.
Considering the bullish possibility, Bitcoin could potentially surpass the 43,860.00 supply zone threshold, targeting the $48,000 level.
On the contrary, a sell-off may ensue in response to rejection or a delay, which may cause Bitcoin to fall below the psychological 40,000.00 threshold. A breach and subsequent close below this level could potentially bring Bitcoin back to the 30,000.00 threshold.