The Fed has raised the interest rate by 50 bps and hinted at further hikes in the next couple of meetings. However, market participants were expecting further hawkishness from the Fed, which made the US Dollar temporarily weaker. However, the strong NFP and dovishness from other central banks showed a rebound in the market sentiment that may extend in the coming days.
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Forex Technical Outlook for 09 May 2022 to 13 May 2022
This week, investors will see the Russian Victory day from where a clue from the Russian’s intention to invade Wes will be found. If Mr Putin indicates further attacks in other European countries, it would have a disastrous effect on the global financial market. Moreover, the EU will disclose its sixth sanction package to Russia, where any positive sign of an Oil embargo would be a price driving event for the Euro. Finally, the US CPI inflation data will be released on Wednesday, where the current expectation is weaker than the previous result.
The US Dollar Index the price showed made ground at 102.35 level from where an immediate bullish rebound has appeared. Therefore, as the current is bullish, the rebound from the 102.35 level would increase the buying pressure towards the 104.50 area in the coming days. On the other hand, a break below the dynamic 20 EMA with a daily close would increase the possibility of consolidation in the US Dollar before showing further price directions.
EUR/USD closed the week at 188 pips above the 2017 swing low. The weekly bottom after NFP and FOMC came at 1.0470 with an indecision W1 candle. The weekly RSI remained below the 30 level with no sign of a rebound. Therefore, investors should closely monitor how the price trades at the weekly swing low to find the upcoming sentiment.
The above technical analysis shows the daily chart of EURUSD where the Fed rate hike and upbeat NFP failed to breach the 1.0470 swing low. Moreover, the RSI rebounded higher from the oversold 30 level while the dynamic 20 EMA remained above the 1.0640 resistance level.
Therefore, bulls are more likely to take the price up towards the 1.0930 resistance level in the coming days. In that case, a bullish solid daily close above the 1.0640 level would increase the buying pressure. On the other hand, a strong bearish rejection from 1.0600 to 1.0650 area with a daily bearish candle would open the possibility of testing the 2017 low.
GBP/USD failed to grab buyers' attention and ended the trading day with three consecutive bearish weeks. In the weekly chart, the current price is exceptionally bearish where the gap between the dynamic 20 EMA and the weekly closing price is almost 790 pips. Therefore, a mean reversion is pending with a bullish correction, but other technical indicators in the weekly chart are still bearish.
This technical analysis shows the daily chart of GBPUSD where the FOMC and BoE rate decisions pushed the price down by 270 pips in a single day. Later on, the price got some relief during the post NFP movement, but there is no sign of a strong rebound. In the indicator window, the RSI moved higher from the oversold 30 level with a substantial gap between the price and dynamic 20 EMA, which is the main reason for the possible bullish correction.
Based on the daily context, investors need more signs before going long in this pair, but as the existing bearish trend is overextended, a minor correction is pending towards the 1.2630 resistance level.
AUD/USD closed the week with an indecision formation in the weekly chart after a strong bearish candle. Therefore, bullish channel breakout and retesting imbalance areas are signs of further selling pressure in the price. Meanwhile, the weekly support is at the 0.6963 level, while the weekly RSI is below the neutral 50 level.
This technical analysis shows how the price rebounded immediately from the dynamic 20 EMA resistance and closed the day below the 0.7092 support level. In the indicator window, the RSI rebounded higher but failed to hold the momentum above the neutral 50 level.
Therefore, buyers can gain from this pair if it shows a strong rejection from 0.7028 to 0.6963 area with a daily close; the primary target would be towards the 0.7280 resistance level. A new swing low below the 0.6963 level would increase the possibility of testing the 0.6783 swing low.
It looks like there is no one to stop the USD/JPY from being overextended to the 2002 high of 135.16 level. There are 9 consecutive weekly bullish candles with the overextended RSI above the 70 level. Although the gap between the price and dynamic 20 EMA is higher in the weekly chart, the price needs a strong reason before going short here.
The above technical analysis shows how the price formed an event level at 128.65 from where a bullish two bar rejection appeared as a trend continuation. As a result, the price is likely to make another swing high, followed by the RSI, aiming to move above the 70 level one more time.
As the current bullish momentum is strong, the expectation is to test the 134.00 psychological level in the coming days. On the other hand, extreme consolidation and violation of swing low below the dynamic 20 EMA would initiate an order building process before moving lower.
Gold is still trading within a strong bullish pressure in the weekly chart, although there was selling pressure in the last 3 weeks. The price remained within a consolidation for a month and made a new swing low last week, which is the primary reason for expecting a selling pressure in this pair.
This technical analysis shows how the XAUUSD showed a bearish rejection from the dynamic 20 EMA while the overall price remained within a bearish channel. Moreover, the daily RSI level remained below the 50 level, possibly testing the oversold 30 area.
Based on the current price action, XAUUSD has a higher possibility of extending the bearish channel by testing the 1821.97 support level. On the other hand, bulls should wait for the channel breakout with a daily candle above the 1907.00 level before aiming toward the 1998.00 key resistance level.
BTC/USD suffered a massive loss after the Federal funds rate decision, where the Fed raised the interest rate by 50 basis points. The Nasdaq 100 experienced the biggest intraday crash since September 2020, while the BTC lost almost 10% of its value before making a new lower low. Moreover, the selling pressure in BTCUSD was increased from the discussion of liquidation calls on MicroStrategy’s Bitcoin investment.
According to the Long-term Holder sentiment (LTH), the average price of coins spent by investors is at breakeven. Therefore, it is an indication that the LTH are panic selling BTC at the average price or breakeven. In that case, the long-term outlook would be bullish if a weekly candle appeared above the $52K level before reaching the current ATH level at $69K.
This technical analysis shows how the price moved lower from the bullish channel breakout to grab the liquidity from the 2022 swing low. The current RSI level is bearish below the neutral 50 level to test the oversold 30 areas. In that case, as the selling pressure came from the channel breakout with a confluence resistance from the dynamic 20 EMA, the price is likely to test the 30K level to grab the sell-side liquidity before showing a buying pressure. However, the alternative approach is to wait for a bullish candle above the dynamic 20 EMA and static 40K level before reaching the 48K area.
Overall, investors have experienced a strong position of the US Dollar against a basket of currencies that may extend in the coming days due to the interest rate fluctuation. Although some correction is pending, investors should focus on trading toward the USD bull from reliable dips.