The Federal Reserve will head towards the Jackson Hole summit on Thursday when several discussions regarding the US economy will happen. This event is a significant policy shift for the Fed as an unofficial policy meeting.
Although the US interest rate is rising at the speed of light, no sufficient effect on the economy is seen. Government yields are pulling back while the stock market has been moving with a vengeance since June, ignoring that the bank is far from the inflation target.
In the Eurozone, the situation is worse than in the US, as the energy shortage pushes natural gas prices to a record high level. In Germany, there is a horror show whose entire industry should avoid using cheap energy. Many companies have become uncompetitive and ultimately unprofitable with the higher gas prices. The effect of these events will be seen in PMI business reports, where the current manufacturing index is sinking deeper while services remain barely at expansion.
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Forex Technical Outlook for 22 August 2022 to 26 August 2022
PMI reports will be the fail attraction to investors, which will be started releasing from French Flash Services PMI on Tuesday. Moreover, the US preliminary GDP q/q is expected to come at -0.8%, up from the previous -0.9% that will appear before the Jackson Hole Symposium.
The list of major economic events to watch for 22 August 2022 to 26 August 2022 is shown here:
- French Flash Services PMI On Tuesday
- German Flash Manufacturing PMI on Tuesday
- USD Flash Services PMI on Wednesday
- US Prelim GDP q/q on Thursday
- Jackson Hole Symposium (Thursday to Saturday)
Before moving to currency pairs, let’s see where the US Dollar index is heading:
The US Dollar index rebounded above the dynamic 20-EMA with strong bullish pressure, indicating that the bearish correction is over. Bulls will likely extend the buying pressure towards the 110.00 level in the coming days.
Investors should monitor how the price trades between 106.45 to 106.80 zone, where a massive bearish pressure below the 106.50 level could eliminate the bullish possibility.
EUR/USD selling pressure extended from the channel breakout towards the primary bearish trend. Bulls tried to take over the control but failed with a bearish rejection at the 1.0359 key resistance level. As a result, a strong bearish weekly candle appeared, making a new multi-week low.
This technical analysis shows how the price closed below the ascending parallel channel support and dynamic 20 EMA with a strong bearish daily close. Later on, a minor bullish inside bar appeared before making a new low to make the Euro vs. US Dollar value similar. The stable bearish momentum below the dynamic 20 EMA is a sign that bears are in control, and the current bearish pressure may extend in the coming days.
Between 15 August 2022 to 19 August 2022, EURUSD has a higher possibility of extending the bearish pressure. The primary target of the selling pressure is 0.9716, 161.8% Fibonacci Extension level from July low to August high.
The alternative trading approach is to find the bullish daily candle above the dynamic 20 EMA that can extend the momentum towards the 1.0359 resistance level.
As said in the previous GBPUSD weekly forecast, GBPUSD formed a double top pattern from a significant supply zone, where massive selling pressure came. The validation of the double top pattern came with a bearish daily close below the dynamic 20-EMA, which made a sharp 200 pips downside pressure.
This technical analysis of GBP/USD shows how the selling pressure extended with a solid supply and demand concept. The price made a bearish structure break, indicating sellers' interest and visiting the supply zone to fill orders before showing a sharp 2.57% decline.
In the indicator window, the RSI has yet to reach the 30 oversold zones, indicating that bears still have the possibility of slowing down the price. However, the gap between the dynamic 20 EMA and price is around 225 pips, opening a possibility of a bullish correction.
In the GBP/USD bearish trade setup, the primary aim would be to wait until the minor bullish correction is over before joining the rally towards the 1.1600 key support level.
On the other hand, it is still unsure what price will do with the 1.1764 swing low from where buying pressure appeared in July. Any false breakout and bullish exhaustion from this zone would increase the bullish possibility toward the 1.2000 level.
AUD/USD price action became interesting as it came with a new bullish break of structure above the 0.7046 level. However, the bullish sentiment eliminated the buying momentum with a sharp bearish weekly candle engulfing the previous bullish week.
This technical analysis indicates how the price trades lower with five consecutive trading days. However, the price is still above the 0.6869 to 0.6827 critical zone, from where buying pressure may come.
The Relative Strength Index is below the 50 level, and aimed at 30 oversold zones, indicating pending bears interest in the price. On the other hand, the multiple violations of the dynamic 20-day EMA indicate a corrective price action, which can lead to a breakout.
In the AUD/USD outlook for 22 August, 2022 to 26 August 2022, any bullish price action from 0.6869 to 0.6827 would be buying opportunity toward the dynamic 20-EMA. However, a bearish daily candle below the 0.6820 level would allow testing the 0.6700 key psychological level.
As said in the previous USDJPY forecast, the price made a bullish daily candle above the dynamic 20 EMA that opened the buying opportunity. Moreover, the bullish sentiment came with a broader buying pressure extension after multiple bullish rejections weekly candled.
This technical analysis shows how the daily price closed above the 135.24 support level, increasing the possibility of testing the 139.42 resistance level. The dynamic 20 EMA is still below the price, working as a secondary support level, while the RSI is still bullish.
Between 22 August 2022 to 26 August 2022, the buying approach in this pair is to find intraday bullish rejection candlesticks from 135.50 to 134.80 zone to aim towards the 140.00 level. On the other hand, the bearish pressure below the 134.70 level would alter the current market structure, increasing the possibility of testing the 130.00 area.
XAU/USD bulls failed to hold the momentum above the dynamic 20 EMA, where no significant bulls rejection came. As a result, bears took the price down with a bearish candle below the 20-EMA level, eliminating the bullish opportunity.
This technical analysis shows how the dynamic 20-EMA works as an immediate resistance level while the RSI level turned below the 50.00 neutral level. The broader market trend is bearish, where the current RSI level is more likely to move to the oversold 30 level.
In the XAUUSD weekly forecast, bears should find selling opportunities from the 1787.61 level to the 1750.00 area towards the target of the 1681.74 level. On the other hand, a complete recovery of the last week’s bearish trend with a stable price above the 1807.00 level is needed to consider it a strong trend change.
According to IntoTheBlock’s Global In/Out of the Money (GIOM) model, 1.54 million BTC was bought from 2.60 million addresses, an average price of 20,366.00 level. The current selling pressure from the ascending channel could negatively affect these traders.
Moreover, the selling pressure may significantly decrease towards the 12,000.00 level as HODLers dampen their positions. The only way to get out of the situation is to find the BTCUSD price above 25,000 with strong bullish momentum.
This technical analysis indicates the BTC/USD ascending channel where the current price reached the downside of the channel support. Now, investors should monitor how the price trades at the channel support, where a bearish daily candle below the 20,67717 level would be a strong bearish opportunity.
The alternative trading approach is to form a strong bullish rejection at the channel support and form a bullish daily candle above the 20-day EMA before aiming toward the 25,308.00 level.
The recession fear is not over yet, while countries like Germany are facing difficulties with higher energy prices. Therefore, investors' sentiment would be toward the US Dollar until there is a significant change in the macroeconomy.