The risk aversion sentiment for the rising US treasury yield allowed the US Dollar to become more vital from the beginning of this week. In terms of economic data, the US Consumer Price Index (CPI) was released last week with a four-decade high of 8.5%in March. Moreover, the core CPI, excluding food and energy prices, moved higher to 6.5% for the same period, lower than the expectation of 6.6%. As a result, the US dollar became weaker against the basket of currencies, but the hawkish Fed commentary on the reduction in balance sheets reversed the sentiment with a rally in the US treasury yields.
The National Statistics Office announced that the ILO Unemployment Rate moved lower to 3.8% in the UK, which failed to grab investors' attention. Moreover, the UK annual CPI moved higher to 7% in March, beating analysts' expectations of 6.7%. On the other hand, the EUR was expected to show a bullish momentum, but the ECB failed to show a sufficient hawkish tone. Instead, the ECB’s accompanying statement came with a dovish tone, saying that Russia’s aggression affects the Eurozone economy and beyond. Finally, EU policymakers have noted that the further economic decision will depend on upcoming data where the ultimate approach is to remain flexible in keeping the interest rate stable.
Forex Technical Outlook for 18 April 2022 to 22 April 2022
Investors are going to have a busy week where many economic releases are waiting to be published. However, the main investors' attention will be on New Zealand & Canada’s CPI with China’s GDP. Moreover, there are several statements from BoE, ECB, and the Fed that may work as a price driver for the forex market.
In the US Dollar Index daily chart, the broader market direction remained bullish where the price finally reached the 100.00 psychological level with an impulsive bullish pressure. Moreover, the dynamic 20 EMA remained below the price at the 99.39 static support level, which is the ultimate barrier for bears. Although a bearish correction is pending, the bullish sentiment may extend above the 100.90 area to grab the buy-side liquidity before aiming lower. Therefore, investors should wait for a strong bearish rejection daily candle from 100.50 to 101.00 area to go short in US Dollar, where the primary aim is to test the 99.00 psychological level.
The bearish sentiment in the EUR/USD price remained intact as the weekly chart shows that technical indicators are showing a bearish signal with no sign of exhaustion. Furthermore, the dynamic 20 EMA in the weekly chart remained above the 1.1124 static support level and heading lower, which is a sign of further selling pressure on the price. In that case, the current bearish continuation pressure may extend the selling pressure towards the March 2020 low of 1.0635.
The above technical analysis shows how the price is trending lower with a bearish pressure. The dynamic 20 EMA is above the price and working as resistance, while the RSI is headed more down towards the oversold 30 level.
Based on the current price action, the selling pressure toward the 1.0635 is likely to extend as long as the price trades below the dynamic 20 EMA. In case of recovery, bulls should wait for a daily candle above the 1.0900 level before aiming toward the 1.1124 level.
GBP/USD’s new swing low below the 1.3000 level came from the sharp selling pressure below the dynamic 200 days SMA. Moreover, the 50 days EMA is above the price and heading lower, indicating that the potential death cross is still active.
This technical analysis shows how the Ichimoku Cloud shows a bearish sign while the RSI is slightly bullish near the 50 neutral zone. The MACD Histogram has also turned bullish above the zero areas, but the current price remained steady lower below the dynamic 50 EMA.
Investors may experience a bearish continuation pattern in the GBPUSD price towards the 1.2900 key support level based on the current structure. On the other hand, the bullish recovery might find momentum if a daily candle closes above the 1.3176 level with buying pressure. Moreover, investors should closely monitor the UK CPI release, which might be a key price driving event for this week.
AUD/USD grabbed the buy-side liquidity above the 0.7555 resistance level and closed with a bearish pin bar. Later on, the price followed the bearish sentiment and made a new swing low in the weekly timeframe. Moreover, other technical indicators are still bullish on the weekly chart, with a possibility of a minor correction. MACD Histogram remained bullish but failed to make a new high while remaining corrective above the neutral 50 level.
This technical analysis shows the daily structure of the AUD/USD price, where the most recent price tumbled below the dynamic 20 EMA. Moreover, the RSI moved below the neutral 50 level with a possibility of testing the oversold 30 area.
Therefore, the selling pressure in the AUDUSD price is intact as long as bears hold it below the dynamic 20 EMA. In that case, the primary aim is to test the 0.7280 static support level before following the broader bullish trend in the weekly chart.
USD/JPY had the most successful six weeks after the intense selling pressure in 2016. The upside pressure above the 126.00 level made a new swing high that was not visited since June 2002. In the weekly chart, there are six bullish candles with no correction, which is a sign of extreme buying pressure. In addition, the price invalidated all barriers and created an 845 pips gap with the dynamic 20 EMA. Moreover, other technical indicators in the weekly chart are also overbought.
The above technical analysis shows an extreme bullish price action of USDJPY in the daily chart where the current price trades just below the 127.00 psychological level. In the indicator window, the RSI is overbought above the 70 level, while the dynamic 20 EMA trades below the 124.31 static support level.
Based on the current price structure, A minor bearish correction is pending in this pair, where the broader outlook will be bullish. In that case, any bullish price action in the intraday chart from 126.00 to 125.50 area may take the price above the 127.00 key resistance level.
The gold price was driven by the US economy, particularly after the hawkish FOMC and Fed rate hike this year. Moreover, the Ukraine-Russia war fueled the risk aversion sentiment in the global economy, leading to buying pressure on XAU/USD as a safe haven demand. However, in the technical chart, the current price traded within a rectangle pattern before breaking out above the 1965.17 level.
This technical analysis shows that the price moved higher from the rectangle pattern and formed a bullish daily candle above the 1965.17 support level. Meanwhile, the dynamic 20 EMA is below the price while the RSI is bullish above the neutral 50 level.
Therefore, the buying possibility towards the 2009.58 resistance level is valid as long as bulls hold the price above the dynamic 20 EMA in the daily chart. On the other hand, if the price enters the 1965.17 to 1890.48 zone, it may extend the correction before showing any further buying sign.
Bitcoin's bullish possibility shifted its position to bearish after the daily chart failed to extend the buying pressure from the golden cross. In the weekly chart, the selling pressure is backed by a strong bearish leg from the 61,000.00 high, currently trading within the bullish channel. In that case, any selling pressure from the channel breakout would be an alarming sign for bulls.
On the other hand, the on-chain metric, the BTC held on centralized entities, has dropped to 1.91 million, the lowest level since 6 December 2018. It is a sign that investors are optimistic about the BTC price to see it higher in the coming days. Another bullish signal is coming from the supply distribution by the balance of BTC addresses. It shows that the number of whales holding 100K to 1M BTC has increased from 2.92% in December 2021 to 3.47% this month. Therefore, the increase in whales' investment is a sign that they aim for a substantial uptick at the BTC price in the near future.
This technical analysis shows how the price remained corrective below the 40470.00 near-term resistance level, where any new swing low below 39200.00 would validate the death cross in the daily timeframe. Moreover, the RSI is also supportive for bears to test the oversold 30 level in the coming days.
Based on the current price action, the divergence between the technical and fundamental outlook would be a trend-changing event for BTCUSD. Although the recent selling pressure is potent, any bullish rejection from the 38000.00- 37000.00 area would be a potential buying point in this pair.
Overall, the US Dollar may extend its bullish momentum against the basket of currencies this week after a minor correction. Moreover, the GBP and CAD may show volatility during the CPI release. In that case, investors are advised to follow tight money management during the new release besides following the higher timeframe trend.
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