In the US, the ISM Services index decreased to 50.8, indicating that the service sector may be losing momentum. An unanticipated increase in unemployment claims is indicative of a deteriorating labor market.
The resurgence of the housing market is being hampered by rising mortgage rates, with purchase mortgage applications falling for four consecutive weeks. In addition, net exports are anticipated to impact real GDP growth in the second quarter substantially.
In an unexpected move, the Bank of Canada announced a rate increase of 25 basis points to 4.75 percent. They believed the current monetary policy was not restrictive enough to restore the equilibrium between supply and demand and attain sustainable inflation levels.
Similarly, at its June meeting, the Reserve Bank of Australia increased its Cash Rate by 25 basis points to 4.10 percent, in line with our expectations but startling many market participants. The hawkish tone of both central banks' statements suggests that further monetary tightening is likely.
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Forex Technical Outlook for 12 June 2023 to 16 June 2023
The FOMC is expected to leave its policy rate unchanged at its meeting this week but will emphasize the possibility of a rate increase at its meeting on July 26.
Moreover, the United States Supreme Court will decide on President Biden's proposal to forgive student loan debt. Nevertheless, regardless of the outcome, the more than three-year payment suspension will end in August, posing challenges for some households.
Let’s see the list of events to look at this week:
- GBP Claimant Count Change on Tuesday
- The US CPI m/m on Tuesday
- The US PPI m/m on Wednesday
- FOMC Economic Projection & Rate Statement on Wednesday
- Federal Funds Rate on Wednesday
- NZD GDP on Thursday
- AUD Unemployment Rate on Thursday
- CNY Industrial Production y/y on Thursday
- EUR Main Refinancing Rate & Rate Statement on Thursday
- US Core Retail Sales m/m on Thursday
- Empire State Manufacturing Index on Thursday
- US Retail Sales m/m on Thursday
- US Unemployment Claim on Thursday
- ECB Press Conference on Thursday
- BOJ Monetary Policy Statement on Friday
- Prelim UoM Consumer Sentiment on Friday
Let’s see the market outlook from the weekly forecast:
Bears failed to overcome the 1.0630 low from where a bullish rebound came, but the week ended without any specific direction. Investors should read the price carefully, as a breakout is needed before anticipating a stable trend.
In the EUR/USD weekly chart, bulls have become the ultimate winner as the price moved above the 1.0745 level, which is the 61.8% Fibo Retracement level from the 2022 swing. However, the price reached the flat 20 SMA and 100 SMA levels, indicating that bears are still alive.
The weekly price also shows corrective pressure from the Momentum Indicator, while the RSI shows an advanced movement toward the buyers’ side.
On the daily chart, an extreme correction came where bulls were the ultimate winner. However, no strong price action is visible above the dynamic 20-day SMA, while the 200 SMA remains below the price.
Technical indicators started to show a buy signal from the neutral zone, which could be the early sign of a possible bullish trend.
As per the last week’s projection, a stable market is needed above the 1.0810 level before considering it a strong bullish trend. In that case, the next target level of EUR/USD would be towards the 1.0900 key psychological area.
The coming trading days will be eventful, and the selling pressure may come at any time. A downward momentum with a D1 candle below the 1.0660 level could open a selling opportunity, targeting the 1.0634 and 1.0507 levels.
The broader outlook remained bullish in the GBP/USD Daily price, while several price patterns suggest a new swing high formation in the coming days.
This technical analysis of GBP/USD shows a strong bullish breakout from the symmetrical triangle formation, while the broader market trend is bullish. Moreover, a strong bullish D1 candle came above the 1.2513 level, increasing the possibility of a bullish trend continuation.
GBP/USD bulls recovered above the 21-day SMA and 50-day SMA level, touching the highest level in the last four weeks.
In the indicator window, the 14-day Relative Strength Index (RSI) shows an upward momentum above the midline, supporting buyers' momentum.
As this pair's overall outlook is bullish, bulls may take the GBP/USD price toward the 1.2680 level, which is May 2023 high. However, breaking and holding the price above the 1.2600 level would be challenging for bulls.
The alternative scenario of the GBP/USD pair is that a selling pressure below the 1.2500 level could lower the price towards the 1.2400 key psychological level before reaching the 1.2308 100 SMA level.
As per the last week’s outlook, the descending channel formation with a daily candle above the 20-day SMA opened a long opportunity in the AUD/USD price, which is still valid.
The current daily price of AUD/USD shows a strong bullish momentum, supported by several high formations in the intraday chart. Moreover, the weekly price came with a bullish Quasimodo formation, which may be a strong buy signal.
In the daily chart, the 20-day SMA level shows upward pressure by moving above the 50.00 line, while the current price is above the 50-day SMA.
Based on the current outlook, a minor downside pressure may come in the AUDUSD price, but the broader direction would be bullish, targeting the 0.6800 level.
Conversely, a bearish D1 candle below the 0.6641 demand level could lower the price toward the 0.6563 level.
The broader market trend for the USD/JPY price is still bullish, while the most recent price shows a corrective momentum. Investors should wait for a valid bullish rejection from a reliable level before aiming for the trend continuation.
This technical analysis of USD/JPY shows a bullish trend where the most recent price was sideways.
In the weekly timeframe, the last two weeks were closed bearish but still remained within the body of the most recent bull candle. It is a sign that bulls are offloading some orders and can regain the momentum from a sell-side liquidity sweep level.
The current price faces immediate support from the 20-day Simple Moving Average in the daily chart, while the current RSI is sideways above the 50.00 line.
Based on the current outlook, a D1 candle below the 20 EMA might extend the correction towards the 137.78 level, from where bulls may resume the momentum.
On the upside, any bullish rejection from the 20 SMA level with a new swing high formation could increase the price towards the 140.92 key level.
XAU/USD initiated the week with downward pressure and formed several liquidity grabs from the sellers' and buyers' sides. As the price remanded close to the monthly opening, we may expect a breakout before forming a stable trend.
The technical analysis of Gold shows that the current price trades between 50 and 100-day Simple Moving Average levels, which is a clear sign of corrective price action. Moreover, the current Relative Strength Index (RSI) remains corrective at the 50.00 level, indicating indecisive momentum.
The bullish scenario should come with a US Dollar weakness from the upcoming Fed decision. The first sign may come with a daily candle above the 1990.00 level. Moreover, a stable price above the 2000.00 psychological level could be a potential target for the 2025.00 area.
As the latest price action was corrective, this pair may have downward pressure. A daily candle close below the 1950.00 to 1945.00 area could be an alarming sign for bulls. In that case, a new room might open, where the ultimate target for sellers is to test the 1925.00 level.
The cryptocurrency exchange, Binance, is being sued by the SEC, which claims that Changpeng Zhao, the firm's founder, and CEO, received more than $12 billion in unauthorized transfers. Additionally, the SEC asserts that Binance assisted in evading US sanctions. Binance has refuted the accusations.
Brian Armstrong, the CEO of Coinbase, stated that the exchange has no plans to stop offering staking services or amend the listings due to the SEC's allegations. According to Armstrong, 3% of Coinbase Earn's overall net revenue comes from its staking program.
The European Union has demanded more stringent guidelines for Bitcoin social media advertising. Popular cryptocurrency exchanges are the subject of a complaint from the European Consumer Organisation (BEUC) to the European Commission, which claims that they are deceiving customers about the risks associated with cryptocurrency investment.
For the purpose of promoting and advertising cryptocurrencies in the UK, new, harsher regulations have been finalized by the Financial Conduct Authority (FCA). On October 8th, the new regulations will go into effect. The guidelines demand that cryptocurrency exchanges offer clear and comprehensive information regarding the hazards of investing in cryptocurrencies and forbid them from marketing their goods to individual customers.
The world's regulatory environment for cryptocurrencies is getting more complicated. It will be crucial for cryptocurrency exchanges and other market participants to abide by the relevant laws as more and more nations establish legislation.
The BTC/USD is under pressure from the fundamental struggle, which might work as a bearish signal for the coming days. Moreover, the Federal Reserve’s meeting could increase market volatility, leading to an indecisive momentum.
As per the current outlook from the daily price, the 25,351.00 level could be the crucial price to look at, as breaking below this level could create a sharp downside pressure toward the 24,000.00 level.
On the bullish side, a stable price above the 27,372.00 level is needed before aiming for the 29,247.00 level.
The coming trading days will be volatile as several high-impact releases are pending. As per the current outlook, The Fed might stay back from the rate hike, which could create downside pressure for the US Dollar.