The Federal Open Market Committee showed no major changes in the policy during its two days meeting. The federal funds rate was unchanged at 0.00% to 0.25%, and the Fed kept the monthly purchase of mortgage-backed securities and Treasury security at $40 B and $80 B, respectively.
Moreover, the US Q2 GDP came at 6.5%, missing the expectation of 8.5%. The softer headline rate came from the supply chain problem with a shortage of inventories to meet demand. On the other hand, consumer spending moved higher above the post-pandemic level, providing an overall mixed sentiment for the US economy.
On the other hand, the Eurozone Q2 GDP moved above the expectation with massive support from Italy and Spain. However, the CPI inflation moved moderately higher in July, except for the core inflation.
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Forex Technical Outlook for 2 August 2021 to 6 August 2021
This week, the prominent investors’ attraction is the Non-farm Payroll that may come slightly above the previous result. Moreover, the RBA rate statement may show a dovish tone due to the slower growth in the economy, coming from the Delta variant and weaker Chinese data. Besides, NZD employment and ISM manufacturing PMI would create price volatility for the coming week.
The US Dollar Index failed to take the bullish momentum above the 93.40 swing high and moved lower. However, the price is still above 91.57 event level, and any rebound from this level may resume the USD bull. However, a reliable price direction will come with the NFP data and its reaction to the market.
So, considering the above economic releases, let’s see what might happen in the coming days:
The mixed US Dollar sentiment helped EUR/USD buyers to overcome the static 1.1831 and dynamic 20 EMA. The price had a bullish daily close above these levels with an intense buying pressure. Therefore, as long as the price is trading above the 1.1831 support level, it may grow higher in the coming days.
In the indicator window, we can see Aroon Up (blue line) is above the Aroon Down (red line) and reached 100% level, pointing out that the price shifted the trend from bearish to bullish. In that case, a correction is pending and the buying sentiment is valid as long as the Aroon Up remains in a strong position above the 50% level.
The price showed a bearish pressure last Friday due to monthly profit-taking. Therefore, any rejection from the dynamic 20 EMA may increase the price of the 1.1977 resistance level. Otherwise, a bearish Daily close below the 1.1831 level may initiate a broader correction to the price.
The V-shape recovery, towards the bullish trend, helped bulls make a stable price action above the 1.3800 psychological level. However, the bearish daily close last Friday is indicating that a correction is pending in the chart.
In the indicator window, we can see Aroon Up (blue line) is above the Aroon Down (red line) and reached 100% level. Therefore, the bullish trend has a higher possibility to continue as long as the Aroon Up is above the 50% level.
Overall, the bearish correction may take the price lower towards the 1.3820 area from where bulls may regain momentum. However, a bearish daily close below the 1.1831 level may alter the current market structure.
AUS/USD passed a corrective week with no sign of solid buying pressure after the FOMC. Lastly, the price closed on Friday by wiping up all buying possibilities and closed with a strong bearish daily close. Therefore, as long as the price is trading below last Friday’s high, it may move lower in the coming days.
Traders should closely monitor the RBA Rate Statement coming on Tuesday, where a dovish tone is expected. Therefore, the bearish trend may extend as long as the price is below the dynamic 20 EMA, extending towards the 0.7235 support level.
In the indicator window, MACD Histogram is bullish but squeezing to the zero levels, signifying that bulls are losing their momentum.
After a trendline breakout, USDJPY corrected higher but failed to breach the 110.57 resistance level. Therefore, although the price is hugely corrective, a bearish possibility is higher as long as bears hold the price below the 110.57 level.
The daily chart shows that the price is moving within a range between 110.57 to 109.31 area. Therefore, a bearish breakout from the range with a strong bearish daily close below the 109.31 may initiate a bearish movement towards the 107.00 area.
MACD Histogram remained bearish and making a new low, which is a sign of a strong bears presence. However, a daily close above the dynamic 20 EMA may extend the correction for this week.
The inflation fear failed to increase investors’ attention to the metal market as it is temporary. Analysts have projected a temporary surge in inflation due to the post-pandemic effect that will not stay longer. However, the easing monetary policy is a strong hope for Gold buyers now. Although the price failed to show an impressive bullish momentum after the FOMC, we may consider the buying possibility valid until the price moves below the 1795.15 support level.
The price moved above the dynamic 20 EMA with a bullish daily close last Wednesday that failed to break the near-term high of the 1834.00 level in the daily chart. On the other hand, the buying pressure is backed by multiple failures of bears at the 1795.15 level.
In the indicator window, MACD Histogram failed to move below the zero levels and aiming higher, which is a sign of an upcoming bullish pressure. However, a stable price direction may come after the NFP.
Bitcoin bulls became active as soon as E-commerce giant Amazon talked about adopting cryptocurrency as a payment method. Moreover, the mining sector moved to use renewable energy sources while Tesla restarted taking BTC as a payment method. Therefore, all buying pressures we are watching in the broader crypto market indicate an upcoming bullish pressure where BTC will be a leader.
In the BTCUSD daily chart, the price moved higher above the 35,000.00 level with an impulsive bullish pressure that extended above the 40,000 level. Therefore, bulls have a higher possibility of taking the price towards 50,000 level in the coming days.
However, the gap between the price and dynamic 20 EMA has expended, the V-shape recovery Towards which may increase a short-term bearish correction before showing a strong bullish leg.
Overall, the FOMC showed a mixed sentiment where the US dollar lost its momentum. However, the rising inflation and increase in the Delta variant may keep the market volatile in the coming days. Overall, investors may expect a reversal of the current market momentum due to the monthly birth period, where a stable price direction may come after the Non-Farm Payroll.