The US economy has shown another disappointing employment report in September by adding just 194K jobs. Moreover, the economy added supply-side challenges as the labor market is in short supply, and there is a shortage of finished goods and inputs. Besides, the extension of the debt ceiling too early December may show growth for the coming months. Investors need to monitor how the inflation and retail sales are doing this week. Any match to the employment data might make the tapering questionable.
In other countries, Canada has shown a steady development in the labor market. As a result, the central bank may start a slow purchase of the government bonds from its monetary policy announcement next month. In Asia, the Reserve Bank of New Zealand has become the second developed economy where the central bank raised the interest rate in the current cycle. Moreover, the Reserve Bank of Australia maintained the accommodative monetary position in this month’s meeting.
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Forex Technical Outlook for 11 October 2021 to 15 October 2021
After the Non-Farm payroll, it is time to have other releases and match their direction with the NFP. The week will start with no important releases, but the US CPI may remain unchanged at 0.3% on Wednesday. Small market volatility is expected from the FOMC meeting minutes on Thursday with the AUD unemployment report. Among other releases, there are US PPI on Thursday and Retail Sales on Friday. As per the current expectation, US Retail sales may come lower at 0.5% from the previous report of 1.8%. Therefore, if the actual report comes lower than the last data, we may expect a bearish sentiment to the US Dollar.
In the US Dollar index, the price remained corrective at 94.00 level, where the price failed to break above the 94.50 level with a daily close. Moreover, the volatility at 94.00 area for the last nine trading days may raise a question regarding the upside potentiality. Therefore, if the price comes below the 93.62 swing low, we may experience a bearish pressure for the US Dollar. On the upside, a break above 94.50 is needed to rely on the possible bullish movement towards the 96.00 level.
EUR/USD is moving within a solid bearish pressure where the price made a stable break below the 1.1600 level. However, in the last six trading days price action, we can see a hidden divergence, indicating a bullish correction in the price. Therefore, this week, we expect the price to come above the 1.1600 level towards the dynamic resistance. However, the bearish pressure is expected to remain intact if the price is trading below the 1.1700 level.
The above image shows how the price is trading below the 1.1600 level, where the dynamic 20 EMA and price gap is high. Moreover, in the indicator window, the MACD Histogram squeezes to the zero level with a hidden divergence, indicating a correction.
Therefore, investors may experience a bullish correction at the weekly birth period, but any selling pressure from 1.1650 to 1.1700 may resume the current bearish pressure towards the 1.1500 level. Any break above the 1.1700 level with a bullish daily close may alter the current market structure and take the price towards the 1.1800 area.
As expected, the GBP/USD moved higher with a corrective speed and found resistance at the dynamic 20 EMA. Moreover, the price tried to break above the dynamic resistance but failed. As a result, the price closed the week with a bearish sentiment at the 1.3610 event level. Therefore, any bearish daily close below 1.3600 may initiate a strong bearish pressure in the coming days.
As per the above image, the MACD Histogram moved to the positive zone where the MACD line crossed above the EMA line. However, the price failed to break above the 1.3610 level with a daily close. Therefore, this week, the bearish sentiment may remain intact until the price breaks above the 1.3650 level with a bullish daily candle. In that case, the price may test the 1.3724 resistance level. On the other hand, a daily close below the 1.3600 level may resume the current bearish trend towards the 1.3421 support level.
AUD/USD initiated the sell-off from the 0.7450 demand area, where the price came below the 0.7312 level with a bearish sentiment. However, the price rebounded higher last week instead of testing the 0.7117 swing low. The current price is trading below the 0.7312 event level, where a break below the dynamic 20 EMA with a bearish daily close may resume the current bearish pressure.
As per the above image, the price trades at the 0.7312 area where the MACD Histogram is bullish. Therefore, a break above the 0.7312 level with a bullish daily candle is more likely to work out towards the 0.7423 level. On the other hand, a fresh daily bearish close below the dynamic 20 EMA may lower the price towards the 0.7117 demand zone.
USD/JPY showed an extreme bullish pressure above the 111.50 key resistance level and made a multi-year high at 112.20 level. Therefore, as long as the price is trading above the 111.50 level, it may move higher in the coming days.
The above image shows the gap between the price and dynamic 20 EMA has expanded where the MACD Histogram remained highly bullish. Therefore, although a bearish correction is pending, the overall sentiment will remain bullish until the price comes below the 111.00 level with a solid bearish daily close.
Gold remained the corrective momentum below the dynamic resistance level where last Friday’s daily close was impressive for bears. Last week, the price remained corrective, and tried to test the 1783.76 resistance level. Instead, the price came lower with a long spike and closed the day with a long wicked candle.
The above image shows how the MACD Histogram remained corrective at the positive zone where the price remained corrective. Therefore, a bullish daily close above the 1783.76 level may initiate a fresh bullish trend towards the 1830.00 level. On the other hand, any bearish rejection from the 1783.76 level may alter the current pressure as bearish and lower the price towards the 1723.40 level.
BTC/USD moved above the 50,000.00 level with an impressive bullish pressure with a broader crypto market recovery where the price invalidated the bearish pressure below the 40,500.00 level. However, the gap between the price and dynamic 20 EMA has expanded, pending a mean reversion. Therefore, any bullish rejection from 52000.00 or dynamic 20 EMA may open rooms for further bullish pressure in the coming days.
The above image shows how the price closed above the 52,000.00 level with a bullish daily candle where the near-term resistance is at 59400.00 level. Therefore, any bullish rejection from 52500.00 to 51,000.00 level may initiate a long bullish trend above the 60,000.00 level.
Overall, there is a possibility of a broader US Dollar weakness as a correction for the coming days. However, investors should closely monitor how the CPI and Retail Sales come. A weaker-than-expected report might increase the US Dollar’s weakness against the bast of currencies.