The data for the retail and manufacturing sectors revealed unexpected outcomes that exceeded expectations. Simultaneously, residential construction gained impetus. The FOMC meeting minutes acknowledged the resilience of the economy and reaffirmed the Committee's commitment to bringing inflation back to the 2% target.
In other countries, the most recent U.K. The GDP report confirmed the impressive performance of the British economy in the first half of the year. Last week, indicators such as retail sales and industrial production exhibited sluggish numbers, revealing deeper insights into China's economic fragility.
In a noteworthy occurrence, the yield on the 10-year U.S. Treasury reached its greatest level in 15 years. Although inflation forecasts on the market remained relatively stable, this development prompted a controlled tightening of financial conditions, which the Federal Reserve appeared to welcome.
The housing market felt the effects of the Federal Reserve's restrictive policies acutely. This week, Freddie Mac's 30-year fixed-rate mortgage attained its highest level in over two decades, at 7.09 percent.
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Forex Technical Outlook for 21 August 2023 to 25 August 2023
Let’s see the list of events to look at this week:
- Eurozone PMI on Wednesday
- GBP Flash Manufacturing and Services PMIs on Wednesday
- The US Flash Manufacturing and Services PMIs on Wednesday
- US Unemployment Claims on Thursday
- German IFO Business Climate on Friday
- Jackson Hole Symposium on Friday
Let’s see the market outlook from the weekly forecast:
In the EUR/USD monthly chart, the previous week showed an extended loss as market participants kept an eye on China and US treasury yields.
EUR/USD's price remained bearish after touching the 1.1275 level on 18 July 2023. The price kept moving down for four consecutive weeks and reached the July 2023 low at 1.0833 level. Moreover, the higher timeframe shows that there is no signal of exhaustion.
In the weekly chart, the price keeps pushing higher above the 100 SMA level at the 1.0772 area, which could be the potential downside target for the coming days. Moreover, the Momentum Indicator comes to the midline while the current RSI remains below the 50.00 neutral line.
In the daily chart, the current price action also shows a downside possibility as the recent price shows several lower low formations. Moreover, the current 100 Day SMA is above the recent candles, while the 20 EMA shows a bearish crossover with the 100 SMA. The indicator window shows the same story, where the current RSI extended the loss to the oversold zone.
In the current price action, the near-term support level is at 1.0830 and 1.0770 areas. A downside pressure below these levels could extend the loss toward the 1.0700 key psychological zone.
In case of a bullish recovery, a solid upside pressure with a D1 candle above the 1.1000 level is needed before aiming for a stable bullish trend.
Despite the strong US Dollar, GBP was one of the major currencies showing four consecutive bullish days. However, more clues are waiting from the Jackson Hole Symposium week.
In the recent price, GBP/USD stays below the 1.2780 critical resistance level, a confluence resistance with the 50-day Simple Moving Average (SMA) level with a downward moving 20-day SMA.
On the other hand, the current Relative Strength Index (RSI) shows a downside possibility by remaining below the 50.0 level. It indicates that the broader downside pressure is still active and extends the momentum throughout the week.
A deeper downside pressure in the Pound Sterling indicates the primary target at the 1.2487 level: June 2023 low. Below this level, the next support level is a t 1.2400 level.
On the other hand, a bullish recovery above the 20 and 50-day Simple Moving Average levels could signal a trend change before aiming for the 1.2850 level. Stable price action above the 1.2850 level could increase the price towards the 1.2995 level in the coming days.
It is an extension to the downside pressure in the AUDUSD pair as the price moved below the critical monthly low, where almost the left of the month is yet to pass.
The weekly price action shows an extended loss to AUD/USD bulls, where the current price is trading below the 0.6458 critical support level. As the current price is trading below the multi-month low, investors should monitor how the price reacts before showing a reversal possibility.
The daily price trend is bearish, but the existing trend is overextended below the near-term support level, which could result in a bullish trend reversal. The dynamic 20 EMA is above the current price, while the current RSI is at the oversold zone.
Based on the current daily price outlook, AUD/USD's bullish several is potent as the current price trades at the sell-side liquidity zone.
A strong bullish recovery, with a daily candle above the 0.6450 level or dynamic 20 EMA, could be a reversal signal. However, any bearish reversal from the near-term resistance level could extend the current downside momentum in the coming days.
The lack of fundamental development on JPY pushed the US Dollar to dominate the market. As a result, the price moved above the critical resistance level throughout the week.
In the weekly timeframe, the broader market is trading on a bullish trend where the current price is above the 20 and 100 Simple Moving Average levels. Also, the current RSI on the weekly chart shows buying pressure, trading above the 50.00 level.
In the daily price, a downside pressure was seen on the last two trading days, but the momentum is not enough to consider it a sell-side reversal.
The current price is trading higher from the 20-day EMA and 100-day SMA, which indicates a pending downside correction as a mean reversion.
Based on the D1 chart, downside pressure is potent if the daily candle comes below the 145.00 level. On the other hand, any buying pressure from the 145.18 could resume the existing trend towards the 148.00 area.
XAU/USD selling pressure was potent in the previous week as the price moved below the 1900.00 level for the first time in the last five months. However, further market direction depends on how the Fed reacts to the US dollar during the Jackson Hole Symposium this week.
XAU/USD moved below the 200-day SMA level for the first time since September. However, the RSI in the daily chart is above the 40.00 oversold level, which suggests that an upside correction is pending.
On the bearish side, a daily candle close below the 1880.00 static level could lower the price towards the 1850.00 level. Below this level, a 500 pips drop is potent towards the 1800.00 critical level.
On the bullish side, the 1900.00 level is the barrier to break, as above this level, 1925.00 would be the first resistance before approaching the 1950.00 level.
From Monday's opening price to its weekly low, Bitcoin's price experienced a steep 15.70% decline. The daily candlestick dropped 14% from its opening price on Thursday, surprising many investors.
According to a recent report, Bitcoin's price dropped to the $25,100 range, culminating in liquidation of $820 million worth of long positions across the market.
While a few traders were not startled by this decline due to consolidation, most cryptocurrency market participants were stunned by the decline.
It is likely that these support levels will be tested in the coming days, especially if the Grayscale ETF application is denied. The midpoint of the 2023 rally, at 23,666.00, is a significant accumulation level from a technical perspective. However, given the adverse market outlook and the disintegration of the bull rally's market structure in 2023, the likelihood of a recovery challenging the bearish trend appears remote.
On August 18, Bitcoin's price fell by nearly 14% due to the recent collapse, dashing the hopes of those anticipating a rise above the 30,000.00 level. Bitcoin trades around 26,000.00 below key support levels at 25,200.00 and 24,300.00. While the previous level was attained during the recent decline, it was quickly followed by a 7.29 percent recovery.
The three-day chart's Relative Strength Index (RSI) and Awesome Oscillator (AO) depict a gloomy picture. As bullish momentum wanes, the RSI has already fallen below 50, indicating a transfer in control from bulls to bears.
A US dollar’s correction is pending this week and investors might face a fresh trend after the Jackson Hole Symposium event.