During the past week, there were only a few significant economic updates beyond Federal Reserve Chairman Jerome Powell's interview. The trade deficit in the United States rose to $67.4 billion at the end of last year, and consumer credit growth slowed down to its lowest rate since December 2021. On the other hand, expectations for consumer inflation in the next year rose to 4.2% in February.
In other countries, the Reserve Bank of Australia took the lead by raising its policy rate by 25 basis points, bringing it to 3.35%. Given the bank's assertive tone, it is expected to increase the rate by another 25 basis points in both March and April.
Meanwhile, the central bank in Sweden raised its interest rate by 50 basis points and indicated that it plans to hike the rate once again in the spring while also reducing its balance sheet.
The central bank in Mexico made a surprising move by increasing its policy rate by 50 basis points, more than expected, to 11.00%. The Reserve Bank of India also increased its interest rates this week.
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Forex Technical Outlook for 13 February 2023 to 17 February 2023
With the job market still highly competitive, there are concerns that inflation could resurge, necessitating the Federal Reserve to maintain a tight monetary policy for an extended period. This shift in expectations has recently breathed new life into the value of the US dollar, but the sustainability of this resurgence will depend on the validity of the data.
The upcoming Consumer Price Index (CPI) inflation data to be released on Tuesday will be a crucial indicator. Inflationary pressures are expected to ease, with the headline CPI rate projected to decrease by two basis points to reach 6.3% in January, compared to 6.5% in the previous month. The outlook for the core data is similarly expected to show a decline.
Before proceeding further, let’s see important releases for this week:
- CHF CPI m/m on Monday
- GBP Claimant Count Change on Tuesday
- The US CPI m/m on Tuesday
- RBA Gov Lowe Speaks on Wednesday
- GBP CPI y/y on Wednesday
- US Core Retail Sales m/m on Wednesday
- Empire State Manufacturing Index on Wednesday
- AUD Unemployment Rate on Thursday
- RBA Gov Lowe Speaks on Friday
Now move to the weekly price forecast:
A strong bearish weekly candle appeared after the buy-side liquidity grab, which is a sign of a strong sellers’ presence in the market. Based on this context, Sellers have joined the market and can lower the price even more in the coming days.
This technical analysis represents the daily price of EUR/USD, where the current price is trading within a strong selling pressure. As per the last weekly forex forecast, the downside signal is still valid with more than 200 pips gains.
A stable bearish pressure is visible below the dynamic 20-day EMA, where the immediate resistance level is at 1.0791 level. Therefore, the bearish pressure may increase in the coming days if sellers hold momentum below this critical resistance.
The highest trading volume level from October to February is below the current price, which can limit the downside momentum. The Relative Strength Index (RSI) moved below the 50% level, with an additional space to move towards the 30% area.
Based on this daily price structure, any downside possibility in the intraday chart could offer a short opportunity in the EUR/USD price. However, any unusual report from the US CPI could alter the current market outlook at any time. In that case, a bullish daily candle above 1.0800 is needed to consider the market as bullish, targeting the 1.1033 level.
In the weekly timeframe, strong downside pressure is visible in the GBP/USD price, as shown in the previous weekly outlook. The bearish possibility is still valid for this week, and investors might find the coming trading days effective for bears.
The interesting fact about the GBP/USD daily price is its high volume level from October to February. A strong trading volume level above the current price with a consecutive bearish daily candle signals a huge interest from institutional investors.
The price moved below the dynamic 20 EMA, which is a primary signal of a trend change from bullish to bearish. Moreover, the current RSI level is stable below the 50% area, which can move even lower towards the 30% level.
Based on the daily price outlook of GBP/USD, corrective trading days are coming where the ultimate target is to test the 1.1839 support level.
On the other hand, a bullish trend continuation is possible if the daily candle closes above the 1.2200 level, which will open room for reaching the 1.2500 level.
Like other major currency pairs, AUD/USD remained bearish throughout the week, and bears have a higher possibility of maintaining a stable downside momentum for the coming days.
This technical analysis shows a corrective price action in the AUD/USD daily chart, where the current price is trading above the 0.6860 support level.
The dynamic levels are above the price with a bearish rejection, which already provided a strong sell signal. Moreover, the break below the near-term 0.6860 level could accelerate the downside possibility, where the ultimate target would be the 0.6831 level.
The Relative Strength Index (RSI) is at a 50% neutral area, a sign of corrective price action. In that case, an upside move is possible if a stable price is above the 0.7000 level.
A corrective monthly close and a strong bullish weekly close show indecisive momentum for the USD/JPY. However, if the post-NFP sentiment continues, bulls are more likely to win the battle.
The USD/JPY daily price shows a strong channel breakout towards the buyers’ side. Moreover, the recent daily candles are corrective after the breakout with a pre-breakout structure.
The dynamic 20 EMA is closer to the price, while the RSI shows a strong rebound from the potential 30% level. However, the main challenge, for now, is to breach the high volume level, which is still above the current price.
Based on the current price structure, a bullish daily candle above the high volume 131.85 level would trigger the buying possibility of targeting the 135.00 level. However, a break below the 129.80 level could eliminate the current buying possibility and lower the price at any time.
As per the previous weekly price forecast, the XAU/USD daily price showed impressive bearish pressure after a bullish correction. Moreover, this instrument has a strong possibility of continuing the bearish momentum in the coming days.
This technical analysis shows the daily price structure of the XAU/USD, where the current price is trading below the 1889.82 key resistance level, which is the primary barrier for bulls.
The position of the dynamic 20-day EMA is above the current price and at the 1889.82 resistance area, which is a sign of strong bearish pressure for this week.
Although the high volume level is below the current price, the gap has extended, which increases the possibility of a correction as a mean reversion.
Based on the daily outlook of XAU/USD, the US Dollar could dominate the market this week until an unusual CPI report comes. Currently, the downside possibility is solid in the XAU/USD price, where the current price target is to test the 1825.33 level.
According to InntoTheBlock’s Global In/Out of the Money method, there appears to be immediate support for the price of Bitcoin and potential buyers waiting in the wings within the range of 16,630.00 to 21,066.00.
This area is where around 6 million addresses purchased a total of 3 million Bitcoins, with an average price of 18,627.00. In the event of a sharp decrease in the price of Bitcoin, this support level could provide stability.
Recently, there were two instances where Whale Transactions worth over $100,000 increased significantly, surpassing 1,500. This was a 55% increase from the average of 966 in the last 30 days.
An increase in Whale Transactions in an upward trend signals a possible top formation, as these investors may sell their holdings to realize profits.
As a result, investors who bought into Bitcoin over the last month have now reached their breakeven levels, as reflected by the Market Value to Realized Value (MVRV) model.
On January 20, the MVRV metric reached 22% when Bitcoin formed a local top at 23,770.00. Such a surge typically indicates a local top formation, as investors may sell to book profits.
On Friday, Bitcoin is experiencing tight consolidation after suffering a significant loss of 4.8% on Thursday, the largest daily drop since November 9th.
The current market trend is biased towards a downward movement due to the fresh indications of rising interest rates.
The close below the floor of the near-term consolidation range and the dip below the initial Fibonacci support level at 22,165.00 (23.6% of the 15,437.00 low to 24,243.00 high) on Thursday weakened the near-term structure and generated a reversal signal.
The large bearish candle left on Thursday, combined with the increasing bearish momentum seen on the daily chart, has increased the risk of a further downward movement.
Overall, investors are going to face a volatile trading week as there are several high-impact news that can change the market sentiment. A close attention is needed towards the US CPI, which can provide a clue regarding how the Fed can take the rate decision.