The employment data for June fell short of projections, indicating a downward trend in hiring. Despite this, the Federal Reserve has the confidence to tighten monetary policy on July 26 due to the economy's resilience as a whole and positive incoming data.
The latest figures on construction expenditure for the month of May reveal a significant increase in manufacturing construction. This surge in new manufacturing projects has tremendously benefited numerous regions and is primarily attributable to the expansion of semiconductor manufacturing facilities and electric vehicle supply chains.
The Federal Reserve Bank of Kansas City recently released the Q1 Small Business Lending Survey (SBLS), which provides valuable insight into small business lending activity and terms. This survey is especially significant because it provides the first assessment of lending activity since the banking turmoil in the first quarter, highlighting the vital role that small businesses play in the nation's economy.
The Tankan Survey conducted by the Bank of Japan provides an early indication that Japan's recovery has continued and may have gained momentum in the second quarter. These results imply a possibility of exceeding our GDP growth forecast of 1.2% for 2023 and may prompt the Bank of Japan to adopt a more hawkish stance by the end of the year.
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Forex Technical Outlook for 10 July 2023 to 14 July 2023
Let’s see the list of events to look at this week:
- GBP Claimant Count Change on Tuesday
- NZD Official Cash Rate & Rate Statement on Wednesday
- US CPI m/m on Wednesday
- BOC Overnight Rate & Rate Statement on Wednesday
- GBP GDP m/m on Thursday
- US PPI m/m on Thursday
- US Unemployment Claims on Thursday
- Prelim UoM Consumer Sentiment on Friday
Let’s see the market outlook from the weekly forecast:
As per the previous weekly outlook, EUR/USD completed the bearish correction, and for this week, a strong buying possibility might come with a range breakout.
The EUR/USD pair showed an amazing bullish recovery and formed a stable daily candle above the psychological 1.0900 key resistance level. Moreover, the price regained the bullish momentum above the 1.0921 level, which is a 23.6% Fibonacci Retracement level from 1.0634 to 1.1011 swing.
The buying pressure is potent on the weekly timeframe as the price shows a stable momentum above the 20 and 100-period Simple Moving Average Level. Meanwhile, no clear direction is visible from the 200 period SMA level, but a dynamic mean reversion is possible towards the upside.
On the other hand, the Momentum Indicator shows a positive level, while the Relative Strength Index (RSI) showed an indecisive momentum at the 58.00 level.
A bullish breakout is clearly visible in the daily chart. The dynamic 20-day Simple Moving Average level shows a bullish crossover at the flat 100-day SMA. Technical indicators show a bullish possibility, while Momentum is struggling to breach the 100 level.
As the current price is trading above the 1.0930 level, we may consider the current market trend as bullish, where the main aim is to test the 1.1000 level.
On the other hand, the downside possibility is potent, but a valid break below the 1.0820 level is needed before aiming for the 1.0742 support level.
GBP/USD remains steady with a strong bullish trend, and investors might expect a bullish trend continuation this week.
GBP/USD daily price overcame the momentum above the 21-day Simple Moving Average level, while the 14-day Relative Strength Index shows a bullish possibility.
The particular currency pair showed a descending triangle formation in the last three weeks, where the recent bullish break came with proper validation of the bullish breakout.
The current price trades within a bullish vibe above the 1.2780 trend line resistance, which opens the bullish possibility for the price to test the 1.2900 key psychological level.
On the bearish side, a strong bearish break below the 20-day Exponential Moving Average is needed. Moreover, a daily candle below the 1.2700 level could open the possibility of testing the 1.2600 level.
AUD/USD extended the downside correction and is still trading indecisively within a range. Investors might find a strong trend if there is a strong breakout from the current zone.
The AUD/USD price remained sideways, as shown in the previous outlook, while last week’s price action failed to form a strong momentum above the dynamic 20-day EMA level.
The post-NFP sentiment pushed buyers to join the market, but no sign of a significant bullish reversal is seen.
The buying possibility depends on how the price reacts to the 0.6717 resistance level. A bullish break with a D1 candle above this level could be a strong bullish signal for this pair, targeting the 0.6800 level.
The alternative approach is to seek a buy-side liquidity sweep at the dynamic 20 EMA, which could lower the price towards the 0.6500 area.
As per the previous outlook, USD/JPY completed the bearish correction and provided more than 300 pips to bears. For this week, investors should monitor how the price set the bottom before anticipating an upward momentum.
USD/JPY reached the predetermined critical demand zone and filled the imbalance left untested in November 2022. As the price showed a significant seller momentum in this zone, we may expect downside pressure in the coming days.
A strong downside pressure was seen in the USD/JPY price, which clearly came with a counter-impulsive momentum. Moreover, a daily candle came below the dynamic 20-day EMA level, which may work as a reversal possibility.
However, the broader market direction is still bullish, and a rebound is possible. In that case, a new daily candle above the 144.00 level could resume the existing trend toward the 147.00 level.
XAU/USD is still trading within a channel where a strong bullish breakout from the channel resistance could be a long signal.
The daily chart of XAU/USD showed a strong buying possibility as the current Relative Strength Index was above the 50.00 line on Friday. However, the current price trades within a descending channel where a bullish recovery happened last week.
Despite the mixed Non-farm Payroll report, bulls failed to hold the price above the 1930.00 level, but the weekly candle suggests that the price might find a bottom at the 1900.00 psychological level.
Breaking above the 1930.00 level could allow testing the 1950.00 key resistance level. Above this level, the next target would be 1960.00, which is a 23.6% Fibonacci Retracement level from the current swing.
The downside possibility is potent if the price trades below the 1930.00 resistance level. Breaking below the 1900.00 level could grab more sellers' attention, where the main aim is to test the 1870.00 and 1845.00 levels.
The US Nonfarm Payrolls report for June revealed an increase of 209,000 employment, which fell short of market expectations of 225,000. This occurrence may contribute to the potential appreciation of Bitcoin, Ethereum, and other high-risk investments.
Following the publication of the US NFP data, Bitcoin maintained a price above the psychologically significant threshold of 30,000.00, while Ethereum maintained stability above 1800.00.
Bitcoin and Ethereum prices are consolidating in response to the addition of 209,000 Nonfarm Payrolls in the U.S. Since April 2023; this is the first occasion that US NFP data has fallen below market expectations. As predicted, the unemployment rate decreased marginally, reaching 3.6%. These data points have diminished the likelihood that the Federal Reserve will raise interest rates in the future.
Given the historical responses to US NFP reports, market participants should prepare for a week of volatility.
In addition, this report has increased the selling pressure on the US Dollar, creating favorable conditions for potential gains in risk assets like Bitcoin and Ethereum.
BTC/USDT price showed a downside possibility from the bearish divergence, where the RSI failed to follow the price by making a new higher high.
The current downside pressure in the BTC/USD price could face a barrier at the 28000.00 level. Breaking below this level would open the possibility of testing the 25142.00 level.
On the other hand, the current price is still above the 30000.00 level, while the current 20-day Exponential Moving Average is working as an immediate support level. In that case, any bullish recovery with a D1 candle above the 31282.00 level could resume the current trend toward the 45000.00 level.
The Non-farm payroll came with a strong US dollar sell and investors might expect the momentum to extend until the CPI report comes.