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Forex Forecast & Forex Technical Outlook for 18 September 2023 to 22 September 2023

Forex Forecast & Forex Technical Outlook for 18 September 2023 to 22 September 2023

In August, the Consumer Price Index rose by 0.6%, signifying the most notable monthly increase since June 2022. Given the recent rise in petrol prices, this outcome was widely anticipated. Intriguingly, both short-term and long-term consumer inflation expectations have decreased, indicating an increase in consumer confidence.

In the European Central Bank's (ECB) September monetary policy assessment, ECB officials ultimately implemented an additional 25 basis points of monetary tightening. However, the true focus of the meeting shifted to the future recommendations associated with this decision.

As the next meeting of the Federal Open Market Committee (FOMC) approaches, it is widely anticipated that the fed funds target rate will remain unchanged between 5.25 and 5.50 percent. This position reflects the observed deceleration in inflation. Nevertheless, given that inflation remains above the target, it is likely that the FOMC will signal its willingness to tighten further if incoming data warrants it.

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Forex Technical Outlook for 18 September 2023 to 22 September 2023

Let’s see the list of events to look at this week:

  • AUD Monetary Policy Meeting Minutes on Tuesday
  • CAD CPI on Tuesday
  • The US CPI on Tuesday
  • Federal Funds Rate and FOMC Statement on Wednesday
  • SNB Policy Rate and Rate Decision on Thursday
  • GBP Official Bank Rate and Policy Summary on Thursday
  • German and French PMIs on Friday

Let’s see the market outlook from the weekly forecast:

EUR/USD

As per the previous weekly forecast, EUR/USD extended the bearish pressure but failed to breach the May 2023 low. However, it is time to see how the price reacts in this area in the FOMC week.

EUR/USD

The US Dollar ended the week positively against other major currencies. As a result, the EUR/USD pair closed red for the ninth consecutive week. Moreover, the latest weekly close showed no sign of a bottom formation from where a bullish reversal can happen. 

The EUR/USD price moved below the 100-week SMA level for the first time in the last three months, while the current 20 EMA level shows a downside continuation pattern by remaining above the current price. 

In the weekly timeframe, the Momentum Indicator moves below the 100 lines, while the current RSI is heading bearish, below the 40.00 level.

The downside continuation in the daily EUR/USD price is potent as the current price is heading down while the moving averages are above the latest candlestick. However, the current price faces support from the 1.0637 level, which is the 161.8% Fibonacci Extension level from the September 7-12 peak.

As per the current weekly EUR/USD projection, a strong support level is visible at the 1.0640 level, which could be the major barrier for bulls. Below this level, the next support level is at 1.0515, which is the March low. 

On the bullish side, a decent recovery with a daily candle close above the 1.0700 level could increase the price towards the 1.0820 to 1,0840 area.

GBP/USD

The Pound Sterling continued moving weaker against the US Dollar and moved below the 1.2400 critical area. As the current price moves with the oversold technical indicators, investors might see a fresh movement after the Fed and BoE policy decisions.

GBP/USD

The GBP/USD price continued pushing down and moved below the 200-day Simple Moving Average level. The weekly price shows a 700 pips drop from the 1.3144 peak, and still, there is no sign of a bullish recovery. Moreover, the 100-week SMA and 20-week EMA levels are above the current price, aimed down, which could result in a bearish trend continuation.

In the daily chart, the current price trades within a descending channel, which is a sign of a downside continuation. Moreover, a bearish daily candle came below the 161.8% Fibonacci Extension level from the 23 low to the 30 high, which signals a bearish over-extension.

The 14-day Relative Strength Index (RSI) shows selling pressure by moving towards the oversold zone, while a bearish crossover is seen between 20 EMA and 100 SMA levels.

Based on the current price behavior, a bearish continuation is possible as the current price trades below the 200-day Simple Moving Average.

On the other hand, a bullish recovery with a descending channel breakout could be a long signal, where the ultimate target is to test the 1.2800 level.

AUD/USD

In the previous week, the AUD/USD price moved sideways, but investors might find a reliable price direction after the FOMC rate statement and Federal Funds rate. 

AUD/USD

In the weekly price of AUD/USD, the overall momentum is bearish. However, the recent price action shows an extreme correction after an impulsive bearish pressure. 

The 20-week EMA and 100-week SMA levels are above the current price, which signals a pending bullish correction as a mean reversion. 

In the daily chart, the highest activity level since the July high is closer to the current price, which signals an active accumulation in the current price area. In that case, a strong bullish recovery with a daily candle above the 0.6500 level could be a strong bullish reversal in this pair.

On the other hand, the existing market trend is bearish, and investors should closely monitor how the price reacts to the immediate swing low. Any bearish signal from the near-term dynamic level could extend the downside pressure toward the 0.6300 area.

USD/JPY

The USD/JPY price continued pushing higher throughout the previous week after the comment from BOJ Governor Ueda, regarding the change in the monetary policy decision. 

USD/JPY

The weekly chart of USD/JPY shows a strong upside pressure, where the minor downside momentum was short-lived. 

The weekly RSI is supporting bulls by remaining just below the 70.00 level, while the dynamic 30 EMA is below the current price.

In the daily chart, a re-accumulation is seen from the volume structure, showing that the buying pressure is increasing with the price movement. Moreover, the 20 DMA is working as an immediate support, backed by the SMA.

Based on this structure, a bullish trend continuation could extend the buy-in pressure toward the 150.00 level in the coming days. However, strong downside momentum is needed to form the trend change, which could happen from toe dovish FOMC.

XAU/USD 

The Gold price remained corrective throughout the week with no clear direction. However, a stable market momentum might be seen after the FOMC, where a dovish tone could be a strong, long signal. 

XAU/USD 

The short-term outlook of XAU/USD is corrective, which needs additional price action before forming a stable trend.

The latest week started with a downside pressure but rebounded immediately on Friday. Still, the price trades below the 20-week SMA level but above the 1900.00 critical psychological level. 

As the weekly close came with a bullish reversal candlestick formation, the price is likely to reach the 1950.00 level before showing a bearish opportunity. 

In the daily chart, the bullish recovery from visiting the 15 August low could signal a strong bullish continuation, supported by the bullish RSI. However, the flat 100-day SMA is still above the 20 EMA.

Based on this outlook, a bearish recovery and a daily candle below the 1900.00 level could be a short signal, targeting the 1850.00 level. On the other hand, investors should closely monitor how the price reacts during the FOMC, where a bullish recovery above the 100-day SMA could be a long signal, aiming for the 2000.00 level. 

BTC/USD

The historical returns data for Bitcoin indicate that September has been its worst-performing month over the past 12 years. However, November is the best-performing month, with an average return of 37.96%, while September is the worst, with a return of -5%. 

The same concept applies to quarterly returns, with Q3 having the lowest average return of 4.21 percent and Q4 having the highest average return of 93.38%.

The bearish prognosis will be invalidated if the Bitcoin price converts the 200-day simple moving average at 27,670.00 on the weekly time frame into a support floor. If BTC bulls are able to maintain their position above the newly formed support, it will likely entice buyers who have been on the sidelines.

Another scenario where Bitcoin price could blast through these barriers would be if a spot Bitcoin Exchange-Traded Fund (ETF) is approved. The sudden avalanche of purchasing pressure following the approval of an ETF would outweigh the selling pressure and propel BTC above 36,000.00 to the psychological level of 40,000.00.

BTC/USD

BTC/USD price reached the critical demand zone, from where a solid fundamental development could initiate a bullish pressure. Moreover, a daily candle closes above the dynamic 20 EMA, while the 100 SMA is still flat at the 29000.00 level.

In that case, a bearish pressure with a daily close below the 24,000.00 level could be an alarming sign for bulls.

The coming trading days will be volatile due to the large number of high-impact releases. Investors should closely monitor how the Fed reacts at the FOMC meeting to gauge the long-term market structure.

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