The war-driven volatility and Fed rate hike were main price drivers that sent the US Dollar back and forth throughout the week. In the war, Russia is willing to find a peaceful solution if it stays with President Putin’s main strategy. On the other hand, Ukraine made it clear that they will not compromise by losing their lands, according to the recent statement from President Zelenskyy's aides, Ihor Zhovkva.
The Federal Reserve raised the interest rate by 25 bps to 0.50% and showed a hawkish sentiment by mentioning six rate hikes in 2022 and more in the coming years. Moreover, the Fed chair, Jerome Powell, said they had improved the US economy by reducing the balance sheet. However, he added that the current uncertainty from the Ukraine-Russia crisis might work as a barrier to economic growth and rising inflation.
On the other hand, the COVID-19 is back in the global headlines after reporting lockdowns in China in major cities. Moreover, the current wave in China came while the Eurozone was lifting the restriction. Therefore, investors should closely monitor how infection rates are coming where further increase in infection rates would increase the volatility in the forex market.
Forex Technical Outlook for 21 March 2022 to 25 March 2022
The week starts with several central bank heads where the Fed Chair Powell will speak several times. German manufacturing and services PMIs will be released where the current expectation is lower than the previous result. The SNB Policy Rate will appear on Thursday, where no significant change is expected.
In the USD index, the price became volatile where multiple attempts to make a new swing high above the 99.41 level failed with a bearish daily close last Friday. However, the bearish pressure could not extend the momentum below the 97.97 static support level. In that case, the extreme volatility at the swing high may influence bears to increase their activity where any bearish daily candle below the 97.50 level would be a selling opportunity. On the other hand, a strong rebound from 97.79 level would increase the buying possibility towards the 100.00 psychological level.
The bearish breakout in the EUR/USD from the rectangle pattern showed a strong 2.74% downside pressure after a correction. However, the selling pressure below the dynamic 20 EMA became volatile due to the mean reversion. As a result, the price rebounded higher but ended the week with a failure to break the 1.1124 resistance level.
This technical analysis shows how bulls became stronger than bears through the Traders' dynamic index in the indicator window. The TDI line found the bottom at the lower band and moved higher with a correction. However, the current TDI level is below the potential 50 level while the price faced the 1.1120 resistance. As the TDI has open space upside, a buying pressure in the price chart may grab buyers’ attention.
Based on the current price structure, as the broader market trend is bearish, any daily candle below the 1.1030 has a higher possibility of extending bearish activity towards the 1.0810 static support level. On the other hand, the bullish pressure towards the 1.1324 needs a solid daily close above the 1.1124 level with a considerable correction.
After finding a ground at the 1.3000 key support level, GBP/USD showed a buying pressure with a counter-impulsive momentum. The price formed a bullish two-bar reversal at the key support level and reached near the dynamic 20 EMA as a mean reversion.
This technical analysis shows that the buyers’ activity has more room for upside as the TDI level is below the neutral 50 level. However, the weekly closing happened below the 1.3195 resistance level, which is below the dynamic 20 EMA.
In this context, bulls are more likely to take the price at the 1.3400 level, which is the 61.8% Fibonacci retracement level of 18 February high to 14 March low. However, investors should monitor how the price trades at the dynamic 20 EMA resistance, where any strong bearish rejection with a daily close below the 1.3140 level is likely to extend the current selling pressure towards the 1.3000 level.
AUD/USD bulls showed dominance by establishing a solid rebound from the channel support with a daily close above the 0.7237 static resistance level. Therefore, the upcoming price direction might find a ceiling at 0.7471 level before showing a bearish correction.
The above technical analysis shows strong buyers’ presence as the Traders Dynamic Index is above the 50 level with an upside pressure. However, the TDI line is still below the upper band, indicating a minor buying pressure above the current market price. Therefore, the price may test the 0.7471 resistance level before moving down towards the dynamic 20 EMA.
In this week, any bearish possibility from 0.7350 to 0.7550 is more likely to take the price down towards the 0.7237 support level. Therefore, investors should closely monitor how the intraday price trades, where any break of the bearish swing low would increase the selling possibility.
USD/JPY bullish pressure came with an ascending triangle breakout where the price reached near 119.50 level, which is the 261.8% Fibonacci Extension level of the February high to March low. Therefore, as long as the price trades below the 119.50 level, bears have a higher possibility of extending a corrective momentum towards the 117.58 level.
The above technical analysis extreme buyers' activity in the price from the TDI line above the upper Band. The buying pressure came from the economic uncertainty in the Asian economy with the Fed rate hike. However, the extreme buying pressure made a 2.7% increase in the price from the near-term swing level of 116.40 level.
In this week, a bearish correction is likely to occur where any bearish opportunity from 119.00 to 119.80 level has a higher possibility of taking the price down towards the 117.56 level.
The war-driven bullish sentiment has become questionable in the XAU/USD daily chart that faced a 7.38% loss from the monthly high. Moreover, the rate hike by the Fed with a hawkish tone influenced investors to rely on the US Dollar.
The above technical analysis shows how the price formed an inverse V-shaped recovery with a bearish close below the static 1951.00 support level. As the daily close of last Friday came below the dynamic 20 EMA, we may expect further selling pressure in the XAUUSD price.
Therefore, any bearish opportunity from 1930 to 1945 with the lower timeframe’s support would lower the price towards the 1882.00 support level. On the other hand, an immediate rebound with a bullish candle close above the 1951.00 level may resume the current trend towards the 2030.00 level.
BTC/USD price remained stuck between $35K to $45K without any directional bias. On the other hand, the price crash in late January found an equal buying pressure from the 34,700 support level. It is the level that is making BTCUSD bulls active and strong against the strong bearish trend. In the recent chart, the trading volume in the daily demand area came with an increased momentum where the buy stop liquidity is untouched above the 45924.73 level.
The above technical analysis represents a bullish potentiality in the BTCUSD daily chart as bulls are favored from dynamic support and the TDI line. Therefore, as long as bulls hold the price above the 37312.12 support level, the price will likely extend the buying momentum above the 46000.00 level in the coming days.
Overall, most of the major currencies might find relief from the US Dollar’s dominance due to the FOMC move. However, global uncertainty might make the market volatile anytime that requires closer attention to the risk management system.