The Fed showed a hawkish tone in December’s FOMC minute, overshadowing the recent surge in the Omicron infection. Moreover, the December Job data came with a confusing rate where the Non-Farm payroll showed only 199K jobs. On the other hand, the household employment data showed a gain with a decline in the unemployment rate to 3.9%. The slightly softer than expected ISM Manufacturing PMI also suggests that the wider trade gap from supply chain issues is stable after the pandemic surge. However, investors should closely monitor how the current Omicron sentiment increases where any surge would hurt US economic releases.
December CPI showed a surprising move in the Eurozone by a 5% year-over-year gain. On the other hand, the retail sales showed a positive movement in November, although COVID cases are increasing. Therefore, a drop in the Eurozone economic confidence is expected for December due to the slower development.
Besides economic releases, investors should monitor how COVID cases are coming. The recent Omicron variant is spreading worldwide, but vaccinations, immunity systems, and therapeutics are likely to affect human bodies against the virus positively. However, the rise in infection rate directly impacts the economic sentiment where currency pairs might show an aggressive movement, violating technical levels.
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Forex Technical Outlook for 10 January 2022 to 14 January 2022
The global forex market tested liquidity from the recent Non-Farm Payroll release, where an aggressive movement in the intraday chart was seen. Now it is time to focus on how inflation and retail sales are coming. The US economy is one the tract of raising interest rate this quarter where any sign of the stable CPI rate would increase the possibility.
The current US Dollar index price shows a strong bearish daily close below the dynamic 20 EMA. Before that, the price struggled to rise above the 96.92 resistance level, which is a sign of bears interest in the price. Therefore, the upcoming price direction is bearish as long as the price trades below the 96.92 resistance level. The primary target would be 95.50 and 94.00 areas.
EUR/USD showed a strong intraday volatility in the last trading week. However, at the end of the week, bulls were the winner as they closed the price above the dynamic 20 EMA with a strong daily candle. Therefore, investors should wait for the price to break the 1.3616 resistance level to rely on the upcoming buying pressure in the price.
The above image shows that the MACD Histogram is bullish and aiming higher while the current price is above the dynamic 20 EMA. The only barrier is the 1.3616 static resistance level, where a bullish daily candle above it would increase the buying possibility.
Investors should wait for an intraday correction based on the current price structure where any rejection from the dynamic 20 EMA would be a buying opportunity. The primary target of the bull run would be towards the 1.5941 level. In comparison, a bearish daily close below the 1.1280 would initiate the bearish opportunity towards the 1.1200 level in the coming days.
GBP/USD showed tremendous buying pressure from the channel breakout, but there was no intraday correction to major demand levels in the last trading week. Therefore, a bearish correction is pending in this pair, where the ultimate target is the test of the trendline from August to October high.
The above image shows that, the dynamic 20 EMA is below the price and opened a gap. Therefore, a bearish correction is pending as a mean reversion where the MACD Histogram is bullish. In this context, any bearish correction towards the dynamic 20 EMA would be a buying opportunity in this pair towards the target of 1.3790 level. On the other hand, a strong bearish daily close below the 1.3500 would increase the possibility of a deeper correction towards the 1.3300 level.
AUD/USD is trading within a bullish channel where the recent breakout below the channel support was not strong. Moreover, the price rebounded immediately and closed with a bullish daily candle above the 0.7200 static support level. Therefore, a bullish daily close above the dynamic 20 EMA would increase the buying possibility to complete the channel.
The above image shows that the MACD Histogram moved down and reached the neutral zone while the current price is above the dynamic 20 EMA. Therefore, a break below the 0.7320 with a bearish MACD Histogram would be a selling opportunity in this pair. On the other hand, bulls should wait for the price to break above the dynamic 20 EMA before going long in this pair.
USD/JPY showed a bullish break above 115.50 resistance level but the price rebounded immediately and finished the week at the breakout level. Moreover, the breakout came with a divergence in MACD lines, which is another sign of weakness. Therefore, bears have a higher possibility of taking the price down at least to the dynamic 20 EMA.
The above image shows how the price closed the daily candle above the recent resistance level and rebounded lower. Meanwhile, the MACD Histogram is bullish but losing its momentum while the gap between the price and dynamic 20 EMA is high. Therefore, the price has a higher possibility of moving down towards the 114.00 level. On the other hand, a rebound from the dynamic 20 EMA might increase the bullish possibility in the coming days.
XAU/USD moved lower from the 1829.00 resistance level but failed to break below the 1790.17 support. Moreover, the recent price showed a bullish rejection from the 1790.17 support level where the broader market context is corrective. In this manner, bulls have a higher possibility of taking the price towards the 1829.00 resistance level in the coming days.
The above image shows the PNP formation in the MACD Histogram, where the price is above the 1790.17 event level. Therefore a bullish daily candle above the dynamic 20 EMA would be a buying opportunity in this pair while a break below the 1780.00 is important to see the price at the 1758.00 key support level.
BTC/USD price showed a decent selling pressure where bears were stronger by taking the price below the 45550.00 key support level. However, the recent price found a bottom at 40,500.00 level with a MACD Divergence, which is a primary indication of recovery.
The above image shows that the BTC/USD is aiming lower where the gap between the price and dynamic 20 EMA has extended. Meanwhile, the MACD divergence in play where a recovery in the MACD Histogram to the neutral zone would be a buying opportunity in this pair. On the other hand, a break below the 40,500.00 level with a bearish daily close would increase the bearish possibility towards the 37,129.60 level.
Overall, the US dollar showed weakness against the basket of currencies due to the mixed sentiment in the Non-Farm payroll. Now, it is time to see how inflation and retail sales are coming. Any supportive result would be a buying opportunity in the US Dollar as a part of the interest rate hike.