Forex Forecast & Forex Technical Outlook for 24 July 2023 to 28 July 2023

Last week, the FOMC confronted a steadily more difficult balancing act. Despite their rate increases, consumer spending remains resilient, but other rate-sensitive sectors. Therefore, it is difficult to classify the state of the economy as wholly positive or negative; it is a mixture of both.

In June, the FOMC decided to maintain the status quo but conveyed a hawkish message. We anticipate a 25 basis point rate increase at the upcoming meeting, resulting in a target range of 5.25 to 5.50 percent. We expect the post-meeting statement and press conference to indicate that additional rate hikes are still conceivable, despite market uncertainty regarding further tightening after July.

According to the Survey of Consumer Expectations (SCE) Credit Access Survey conducted by the New York Fed, consumers face obstacles when making substantial purchases. Due to the unpredictability of the near-term economic outlook, credit rejections have increased.

China's economic momentum weakened in the second quarter, with quarterly GDP growth of 0.8% compared to 2.2% in the first quarter. While retail sales slowed more than anticipated in June, industrial production unexpectedly increased. This development has prompted the Chinese central bank to contemplate easing monetary policy in the third quarter, but the waning momentum also poses a downside risk to our growth forecast for China in 2023.

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Forex Technical Outlook for 24 July 2023 to 28 July 2023

Let’s see the list of events to look at this week:

• French Flash Manufacturing and Services PMIs On Monday
• German Flash Manufacturing and Services PMIs On Monday
• The UK Flash Services and Manufacturing PMIs On Monday
• CB Consumer Confidence on Tuesday
• The AUD CPI on Wednesday
• FOMC Statement and Federal Funds Rate on Wednesday
• Euro Main Refinancing Rate and Rate Statement on Thursday
• The US Unemployment Claims on Thursday
• BOJ Outlook Report on Friday
• German Prelim CPI m/m on Friday
• Core PCE Price Index m/m on Friday
• US Employment Cost Index q/q Friday
• Revised UoM Consumer Sentiment on Friday

Let’s see the market outlook from the weekly forecast:

EUR/USD

As per the previous market outlook, EUR/USD managed to show a bearish correction, but the counter-impulsive pressure might see some pressure from a lot of economic releases this week.

The latest downside pressure in the EUR/USD price came as strong bearish pressure, creating a buy-side liquidity sweep. The currency price is trading just above the 38.2% Fibo Retracement level from the 1.0830 low to the 1.1275 high. 

In the weekly price, the price holds the buying pressure above the 200 periods Simple Moving Average. Moreover, the 20-period SMA maintains the upward slope above the 100 SMA. It is a sign that buyers have not done it yet. However, the Relative Strength Index rebounded from the 70.00 overbought level, which increases the possibility of more downside correction. 

The daily price trades far above moving averages, suggesting that a downside correction is pending as a mean reversion. Moreover, other technical indicators have turned flat after reaching extreme conditions.

For this week, the 1.1000 level would be the crucial area to look at. A strong downside pressure with a bearish daily candle below this level could be an alarming sign for bulls. In that case, the downside pressure may extend toward the 1.0920 and 1.0890 areas. 

On the bullish side, a sudden recovery and a consolidation above the 1.1200 level could open rooms for testing the 1.1250 and 1.1400 levels. 

GBP/USD

The strength in the US Dollar and a solid fundamental weakness in GBP pushed the price down for this pair. However, the excessive volatility might invalidate the current market structure any time.

A strong downside pressure was seen in the GBP/USD price, which wrapped up the week at the 1.2860 key support area. Moreover, the downside pressure from the 20 EMA level is questionable, as the latest price moved sharply below it. As a result, we may expect the downside momentum can extend toward the 1.2750 level. 

On the downside, the 1.2660 level would be the crucial demand zone, where the 50-day SMA remains confluence support. However, the only barrier to the downside momentum is the 14-period Relative Strength Index (RSI), which is still above the 50.00 neutral line. It is a sign that bulls are still active in the market, and any dip could be a long opportunity. 

Moreover, the buying pressure supports the triangle support at the 1.2871 level. Any bullish rejection from this particular support level could increase the price toward the 1.3000 key psychological level. 

AUD/USD

AUD/USD showed a bearish rebound, as shown in the previous outlook. For this week, investors might experience a higher volatility for the lot of economic releases.

AUD/USD showed a bearish rebound and closed the week below the 0.6800 key level. It signals that bulls have done with the price, where additional information is needed before finding a long position.

The downside pressure held the daily candle below the 20-day Exponential Moving Average level. The current RSI is at 50.00, indicating that a new swing low is needed before validating the bearish trend.

Based on this outlook, a rebound above the 20 EMA and 0.6800 levels is needed before aiming for the 0.7027 resistance level. As the bearish momentum is strong, a trend continuation opportunity in the intraday chart could increase the possibility of reaching the 0.6550 level.

USD/JPY

This week, the solid bullish recovery in the USD/JPY price opened a strong bullish possibility. Also, the FOMC and BoJ could show their stance this week, which could be a strong price mover for this instrument.

USD/JPY showed a strong bullish reversal in the latest week, increasing the possibility of showing a counter-impulsive bullish momentum. 

Buyers remain strongly active for three consecutive trading days, increasing the possibility of a bullish reversal. As a result, the fresh 50% Fibonacci Retracement from the previous swing could increase the price toward the 145.00 key psychological level. 

Based on the Ichimoku cloud analysis, the current rising future cloud is showing a rebound, while the current price was short-lived as the could support area. 

As the daily price shows a strong reversal, the coming trading days might see the price above the 141.15 level, which could validate the bullish possibility. 

On the fundamental side, the US Central Bank is likely to deliver a 25 bps rate hike this week, while the Bank of Japan could keep the rate unchanged.

XAU/USD 

A strong upside pressure was seen in the XAU/USD price, but a buy-side liquidity sweep and an immediate rebound could lower the price this week.

The buying pressure in the XAU/USD price is still potent as the current price is trading above the 1950.00 key support level, which is also confluence support from the 50-day Simple Moving Average. 

As a result, the buying momentum can extend if the XAU/USD shows a stable momentum above this critical support level. In that case, the bullish continuation pattern may extend toward the 1980.00 and 2000.00 levels.

The current 14-period Relative Strength Index (RSI) shows a bearish pressure by moving below the 50.00 line in the daily chart. It is a suggestion that bulls have lost momentum, and the price is ready to initiate a bearish trend. 

BTC/USD

Recently, NYDIG released a report analyzing the potential impact of a Bitcoin spot ETF on the price of BTC, drawing parallels to Gold and its ETF approval. The report reveals that spot Bitcoin funds such as Grayscale's Bitcoin Trust (GBTC) and spot ETFs outside of the United States have a combined asset value of $28.8 billion.

Comparing Bitcoin to gold, Ecoinometrics's newsletter takes a more cautious approach. They contend that the significant rise in gold prices during the 2000s was due to a combination of factors, such as the feeble U.S. dollar, favorable macroeconomic conditions, and introducing a new exchange-traded fund. Therefore, they believe it is incorrect to compare gold and Bitcoin directly.

Bitcoin's price has been consolidating around the psychological level of 30,000.00 for roughly a month, with little change in the overall outlook. The current price action is contained within the weekly Bearish Breakout range of 29,200.00 to 41,270.00. Any upward movement is likely to be met with selling pressure, but the bulls have not surrendered.

From a conservative standpoint, investors may anticipate a short-term pullback to 27,950.00, but an even better purchasing opportunity may present itself if a correction reaches the psychological level of 25,000.00. 

If the current uptrend continues, the Bitcoin price may reach the Bearish Breakout midpoint at 35,250.00.

The broader market outlook might remain volatile due to a lot of economic releases. As a result, a good price movement might provide a higher return in day trading, but the long-term direction might need a bit more time to find.

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