Investors await the ideal occasion from the Federal Reserve to find a signal about the tapering. The Jackson Hole is the annual economic symposium organized by the Kansas City Fed to show many significant policy changes. The August 26-28 event approached, and the Fed speaker has been dropping tapering hints. According to the July FOMC, policymakers agreed to taper soon, and now any change on the decision during the Jackson Hole would indicate further about the current US Dollar bulls.
The week will start with the flash PMI reading for August on Monday. However, it could have a negligible effect on the market as the major market-moving event will begin next. Here, policymakers will discuss how and when the Fed’s emergency stimulus will wind up. Moreover, the US prelim GDP is yet to be published this week where the current projection is a better than expected result of 6.6%.
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Forex Technical Outlook for 23 August 2021 to 27 August 2021
This week is for the USD, where the key event would be the Jackson Hole summit and Q2 GDP. Before the event, the US Dollar maintains its strong position against the basket of currencies with an impulsive momentum that needs a solid reason to violate.
The massive bullish pressure pushed the USD Index to the 93.44 resistance level and closed the week with a bearish close. Although the movement was strong, the USD Index failed to show a massive bullish pressure above the 93.00 psychological level. Above this level, we should monitor 92.3 and 94.8 as a strong reversal point.
Overall, this week would be significant for forex traders to understand where the US economy is heading:
EUR/USD failed to break above the dynamic 20 EMA on the daily chart and moved below the static 1.1710 support level. However, the price could not show a solid bearish pressure below the 1.1710 bottoms, which made the bearish pressure questionable. Considering the bearish close in the USD index, we may see the EURUSD move up with a corrective speed.
The above image shows how the price is trading below the 1.1700 psychological level. The Price made a daily close below it but rebounded immediately on the next day. Moreover, the gap between the dynamic 20 EMA and the price opened the opportunity of a mean reversion.
Investors should closely monitor how PMIs are released. Any better-than-expected result would create a bullish possibility in the price towards dynamic 20 EMA. Moreover, further strength in the US Dollar may take the price lower towards the 1.1612 level.
GBP/USD moved below the dynamic 20 EMA last week and extended below the 1.3670 support level with a strong bearish daily close. However, the price reached near the August 20 low, from where a bullish correction is expected.
In the above image, we can see the daily chart of GBPUSD where the price extended the gap with the dynamic 20 EMA that increases the bullish possibility for the coming days. Therefore, any intraday buying pressure from 1.3620 to 1.3560 would be a highly probable buying point.
However, the coming days are full with the USD releases, where any unexpected movement from the Jackson Hole or US GDP may turn the table down.
AUD/USD bears took the daily candle below the 0.7319 support level and made a substantial collapse towards the 0.7100 key support level. The dovish RBA and hawkish Fed were a solid combination that attracted sellers with more than 250 pips movement in a week.
The above shows how the price broke below the 0.7220 level with strong selling pressure, violating the regular divergence with the MACD. However, the birth period of this week may show some recovery with a corrective bullish pressure in the price. Therefore, any bearish rejection from the bullish rally may resume the current bearish pressure.
Investors should be aware of the Delta variant’s current uncertainty affecting both the Australian and the US economies. In that case, any sign of relief would increase the buying pressure.
When the US Dollar has beaten other currencies, it failed aggressively against the Japanese Yen. As a result, the massive US bull was unable to break below the 109.00 bottom line. Therefore, any sign of USD weakness this week may increase the buying pressure.
The above image shows how the price showed bearish rejection from the dynamic 20 EMA. Therefore, the price may test the 109.00 level at the beginning of the week, from where a bullish rejection would appear.
On the other hand, any dovish Fed on Jackson Hole or weaker GDP may breach the 109.00 level, taking the price down towards the 107.50 support level.
After a big collapse and rebound, XAU/USD became corrective and started ranging between 1795.15 to 1770.93 level. Therefore, the key event of this week would create an opportunity for breakout traders from XAU/USD.
The above image shows that the price is facing resistance from the static 1795.15 level with incision candles. Moreover, the price moved below the dynamic 20 EMA with a bearish daily close but failed to break below the 1770.93 support. Meanwhile, MACD Histogram turned bullish and made new highs.
Based on this market context, any bearish daily close below the 1770.93 level may initiate a strong bearish pressure towards the 1726.32 level in the coming days. On the other hand, investors should find the price above the 1795.15 level to consider the sentiment bullish.
BTC/USD bulls remained stronger in the price after breaking the 40,000 level. Moreover, the last week showed a bearish correction and rejection from dynamic 20 EMA. As a result, the price started to grow higher and was aiming to move above the 50,000 barrier.
Currently, the price is facing resistance from the 48807.00 event level. In that case, bears may attempt to take the price down toward the 45,000 level. On the other hand, any rebound and a daily close above the 50,000 level would open the room for testing the 60,000 level this week.
Overall, this week’s main investors’ focus will be the Jackson Hole and US GDP. However, the week will start with the PMIs, and investors should closely monitor how currencies are recovering from the strong US Dollar.