The US CPI rose better than expectation of 0.6% in January, where the detailed report indicated that the inflation in major parts of the economy is picking up. The stronger CPI report with a hawkish statement from St Louis Fed President James Bullard increased the possibility of an aggressive move in the next month. As a result, the possibility of an immediate rate hike is knocking where further upside pressure may come for the US Dollar. Nonetheless, this week's meeting minutes may focus on the appetite of 50 bps rate hike in March with a hawkish sentiment. Moreover, it will disclose what other Fed members are thinking about the rate hike where the current possibility is the shift from 3 to 7 rises this year.
In the UK, the headline inflation reached the highest level since 1992 by moving up from 5.1% to 5.4% at the end of last year. As a result, the Bank of England raised the interest rate by 0.25% to 0.5% at the beginning of February 2022. The December number showed a sharp rise in food and non-alcoholic drinks while various supply-demand chain disruptions affected consumer wallets. This week’s January number may come at 5.5% with an increase to the core CPI to 4.3%, although some analysts expect the CPI to increase more following the trend in the US.
Forex Technical Outlook for 14 February 2022 to 18 February 2022
The week will start with the FOMC Member Bullard Speaks, where the current expectation is a hawkish sentiment for the US Dollar. Then, the US PPI report will come on Tuesday, where the current expectation is a rise of 0.5% from 0.2%. Later on, the GBP and CAD CPI will grab investors' attention before the FOMC meeting minutes and AUD employment.
The US Dollar index showed volatility last week by moving up above the dynamic 20 EMA with a bullish impulsive pressure. The multiple bullish daily candles with wicks on the bottom is a sign that bears have failed each day, and bulls won at the end. As per the current price action, the DXY is more likely to move up and test the 97.45 swing high in the coming days. However, the buying possibility is valid as long as the price trades above the dynamic 20 EMA. A bearish daily candle below 95.18 would alter the current market structure and lower the price towards the 94.62 level.
The EUR/USD reached the 1.1481 key resistance level last week but failed to breach the level with a bullish daily candle. The indecision candle with a long wick provided a selling opportunity and gave bears more than 130 pips of profit. As the daily candle of last Friday closed below the dynamic 20 EMA, further selling pressure may come in this pair towards the horizontal support level at 1.1300.
This technical analysis shows that the MACD Histogram showed a bullish PNP formation despite the recent bearish pressure from the 1.1481 level. As the last daily candle failed to show a significant breakout below the dynamic support, any rebound from the 1.1300 level may initiate a broader correction.
Based on the current price structure, any bullish rejection with a daily candle above the dynamic 20 EMA may increase the buying possibility towards the 1.1450 level. On the other hand, any selling pressure below the 1.1300 level may attract bears for taking the price towards the 1.1100 area.
GBP/USD bears failed to take the price below the dynamic 20 EMA and passed the week with indecision. However, the multiple wicked candles above the dynamic level signify that the price is carried by the 20 EMA where the buying pressure is intact for the coming days.
This technical analysis shows the MACD Histogram eliminated the bearish sentiment and remained corrective at the neutral zone. On the other hand, the dynamic 20 EMA is below the price and holding it for a considerable time.
Based on this structure, any bullish daily candle from 1.3489 to 1.3550 is more likely to take the price up towards the 1.3784 level. On the other hand, the break below the 1.3489 level with a bearish daily close might alter the current market structure and lower the price in the coming days.
AUD/USD trades within a bearish trend where the most recent bearish rejection from the 0.7247 level increased the selling possibility towards the 0.700 area.
The above technical analysis shows that the MACD Histogram turned bullish where the price remained corrective within the bullish channel. Moreover, the price remained corrective at the dynamic 20 EMA, where a bearish breakout from the channel is more likely to extend the current bearish trend.
Based on the current context, a bearish daily candle below 0.7108 may lower the price towards the 0.7000 level in the coming days. On the other hand, any rebound in the trend with a bullish candle above the dynamic 20 EMA might extend the buying pressure towards the 0.7250 area.
The symmetrical triangle formation within a bullish trend in the USD/JPY daily chart is a solid buying option for bulls where the primary target is towards the 116.50 swing high.
The above technical analysis shows how the MACD Histogram changed its direction from bearish to bullish while the price faced minor support from the dynamic 20 EMA.
In this context, any bullish daily candle above the 115.60 level may increase the buying possibility towards the 116.50 swing high. On the other hand, investors should monitor how the price trades below the dynamic 20 EMA to find another buying opportunity at the 114.19 level.
XAU/USD eliminated all losses from the recent FOMC selling pressure and reached near the key supply level. Therefore, investors may experience selling pressure as long as the price trades below the 1877.22 swing high.
The above technical analysis shows that the MACD Histogram changed its direction from bearish to bullish where the last Friday’s daily candle shot higher by creating a gap with the dynamic level.
In this context, the recent price reached near the key supply zone of 1877.22 to 1867.33 area; any bullish rejection in the daily chart would be a bearish opportunity. In that case, the ultimate target of the possible selling pressure would be towards the 1829.14 area. On the other hand, if the price breaks the 1877.22 resistance level, further upside pressure may come towards the 1916.20 level.
Bitcoin moves roughly 40% in just three weeks after the massive drop to the $32,837.00 level. In addition, the bullish swing made a new high at the $45,956.00 level, which is a strong supply zone on the weekly chart. Therefore, considering the recent price action, it is time for the BTC/USDT price to set a direction where the strong barrier is at the $46,198 level for bulls.
According to the supply on on-chain metrics, the BTC price from the higher timeframe shows that bulls are strong. The number of Bitcoin holdings in centralized exchanges was reduced by 170K since 1 January, indicating an optimistic position for BTC bulls. On the other hand, another possibility is that the price may crash to 30,000.00 psychological level to collect liquidity below the support level before forming the actual bullish trend.
The above technical analysis shows how the price made a new swing high above the 44,393.00 level while the dynamic level remained below the price. Meanwhile, the MACD Histogram maintained a strong bullish position while the MACD line aimed higher with a solid buying pressure. In that case, any bullish rejection from dynamic 20 EMA or static 41320.81 level has a higher possibility of taking the price up towards the 52084.52 level in the coming days.
Overall, the UK and Canada CPI are the most price-changing event this week that may increase the volatility. Therefore, investors should remain cautious to avoid unexpected stop loss hits and return during the news release.