This week's economic indicators highlighted resilience, and our forecast of the Federal Reserve raising its main borrowing rate to 5.25% and maintaining it through year-end seems to be aligning with market-based rate expectations.
In the U.K., inflation decreased for the third consecutive month in January, but it still stands at 10.1% year-over-year, five times the Bank of England's target of 2%.
Japan's economy rebounded in Q4 by 0.2% quarter-over-quarter after a negative Q3, and we anticipate mixed growth trends to persist throughout the year.
However, the job market in Australia experienced a decline for the second month in a row, primarily due to a reduction in full-time employment, which contrasts with the December jobs report.
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Forex Technical Outlook for 20 February 2023 to 24 February 2023
The coming trading days will be eventful to other currencies, which will shift the sentiment from the US dollar to CAD and EUR.
Before proceeding further, let’s see important releases for this week:
- Flash Manufacturing & Service PMI on Tuesday
- CAD CPI on Tuesday
- US Flash Services PMI on Tuesday
- AUD Wage Price Index q/q on Wednesday
- Official Cash Rate on Wednesday
- FOMC Meeting Minutes on Wednesday
- US Prelim GDP q/q on Thursday
- Core PCE Price Index m/m on Friday
Now move to the weekly price forecast:
The downside correction is strong in the EUR/USD price, and bears have grabbed a moderate gain from last week’s price forecast. For the coming days, the downside possibility is potent, which could result in a trend reversal.
EUR/USD ended the week nearly at the previous weekly low of 1.0612. Moreover, the price moved below the 200-day simple moving average, holding a strong position below it.
The technical analysis of the weekly chart indicates that the selling pressure is increasing, although it is not time to say the long-term bull run has started. As the 100 Simple Moving Average is below the 200 SMA, we can say that the long-term and medium-term investors are starting to have a strong position in the market.
Another factor that can increase the selling pressure is the current position of the fixed range high volume level. The highest volume level from January to February is above the current price. Moreover, multiple trading days have passed, and the price is still below the high volume area.
The bearish outlook appears stronger in the daily chart as the dynamic levels have continued to slide in negative areas. The 20 EMA is gaining downward traction above the current level, providing dynamic resistance at around 1.0795.
Based on the daily price outlook of EUR/USD, the bearish possibility is solid, and the price can move lower towards the 1.0484 level. A strong bullish recovery and this double price above the 1.0800 psychological level are needed to eliminate the current bearish possibility.
As per the previous weekly forecast, GBP/USD continued pushing lower, and coming trading days will have the potential for bears.
The daily price of GBP/USD continued pushing lower following last week's price prediction, but a strong bullish recovery is seen before the weekly close.
The bullish daily Candle last Friday is a sign that bulls have joined the market, but it is not the right time to say that the long-term bully strength could resume. The 200-day simple moving average is about the price, while the dynamic 20 EMA is working as an immediate resistance.
The high volume level from January to February timeframe is also above the current price, and a stable bearish momentum is seen in the Relative Strength Index as it is holding the position below the 50% area.
Based on the current market structure, an upside correction is possible in the GBP/USD price, but any selling pressure from 1.2130 to 1.2210 could resume the existing bearish trend.
AUD/USD passed a volatile trading week where bears were the ultimate winner. However, the recent daily candlesticks showed a sign of increased trading volume, which could result in a range breakout in the coming days.
The latest high volume level in the AUD/USD price is above the current level, where the latest static resistance is at 0.7029. As the current price is trading below the high volume level, we can expect the bearish pressure to extend.
The 200-day Simple Moving Average acts as a dynamic resistance from where a downside crossover is seen with the 20-day EMA.
The Relative Strength Index moved below the 50% level after a correction, which signals further bearish possibility until the RSI reaches the 30% oversold area.
Based on the current price structure, a minor bullish recovery and any bearish rejection from the 20 Exponential Moving Average could resume the selling pressure towards the 0.6700 level.
On the other hand the long-term trend is still bullish, and a daily candle above the 20 DMA would be an alarming sign for sellers.
A strong bullish Channel Breakout and this double price section of the 20 EMA extended the bullish momentum in the USD/JPY price. As the current price is facing selling pressure from the 134.79 resistance level, we may expect a corrective price action soon.
USD/JPY reached the target level of our previous week’s commentary, and the price found the 134.79 level as a strong resistance. However, the dynamic 20 EMA is still below the price, and the 200 SMA is signaling a beginning of a new bullish trend.
The latest high volume level is spotted below the 20-day Moving Average, where the current RSI level has more space to reach the overbought 70% area.
Based on the current price outlook, we may expect the corrective price action in the USD/JPY, where the price is more likely to make a new swing high above the 134.75 level. A strong buying position about the 20 EMA could increase the possibility of reaching the 140.00 psychological level.
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.
The Gold price has a significant pivot at the 1830.00 level, which is the 38.2% Fibonacci retracement level of the recent uptrend. If this level is confirmed as resistance, the XAU/USD could experience a further decline towards the psychological support level of 1800.00.
Additionally, a strong support area is located just below this level, formed by the 100 and 200 days SMAs, and the Fibonacci 50% retracement level at 1780- 1790.
On the other hand, the 50-day SMA acts as dynamic resistance at 1860.00, followed by the Fibonacci 23.6% retracement level at 1880.00. A daily close above the latter may lead XAU/USD to encounter the psychological level of 1900.00 level.
It's important to note that the Relative Strength Index (RSI) indicator on the daily chart has fallen below 40 for the first time since the beginning of the recent uptrend in early November. This indicates that the Gold price may have more room to move downward before it seeks a technical correction.
Although the long-term outlook for Bitcoin's price seems secure, some short-term outlook is uncertain as "whales," appear to be cashing in on profits following a test of the $25,000 psychological threshold.
On February 16, the Whale Transaction metric, which monitors transactions by investors valued at $1 million or more, experienced a surge after BTC's rally. This increase suggests that these high-net-worth individuals are transferring their assets to realise profits.
Consequently, such actions in on-chain metrics are frequently utilised to identify potential market peaks. If this trend continues and investors profit, it could shift the market's direction.
In the daily price of BTC/USD, the recent bullish recovery with a strong daily candle above the high volume level indicates strong buying pressure in the market.
The dynamic 200 SMA is the immediate resistance, while the Relative Strength Index (RSI) rebounded from the 50.00 level.
Based on this outlook, BTC/USD might create a new swing high above the 25,192.54 resistance level, but a stable momentum is needed above the 28,000.00 level to consider the upcoming price direction as bullish.
A strong volatility awaits from the US GDP and PMI from multiple major economies. However, corrective trading days may come as it needs some time to see a clear direction from the Fed regarding the rate hike possibility.