The extreme volatility with a lot of financial data made the financial market messier, like a teenager’s bedroom. The European Central bank raised the interest rate by 0.50% for the first time in decades. Euro was seen to be rallied from the rate hike sentiment, but the gain was tempered by the Italian government and post ECB sentiment.
In the US, the US Initial Jobless Claims reached a multi-month high while a soft Philly Fed Business Condition Index spooked the bond market. Moreover, the US curve showed a bowl shape after the US 10 years moved below the 15 basis points. As a result, the US Dollar index weakened as the recession fear ramped up.
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Forex Technical Outlook for 25 July 2022 to 29 July 2022
The Federal Open Market Committee meeting is the most awaited event for this week, where the Fed will likely raise the interest rate by 75 bps. Before that, Australian CPI and US CB Consumer Confidence will hold the market sentiment. Finally, the advanced GDP q/q for the US and Core PCE Price Index m/m will appear on Thursday and Friday, allowing investors to find the market sentiment for the US economy.
The US Dollar Index (DXY) extended the selling pressure but failed to break below the dynamic 20 EMA resistance. Moreover, the price ended Friday’s trading session with an indecision formation at the support zone. As the long-term trend is still bullish, any recovery with a D1 close above the 107.37 level could resume the existing trend.
As per the previous weekly commentary, EUR/USD managed to push higher and reached the 1.0279 near-term resistance level. However, the intraday price action for the week was volatile, where several violations of near-term swing levels were seen. Moreover, the volatility may extend where a skeptical approach is needed due to higher inflation and interest rate hike uncertainty.
This technical analysis shows how the daily chart of EUR/USD indicates sellers' dominance in the market where the price consistently made lower lows from left to right. In this context, remaining on the selling side would provide a higher return than waiting for a breakout.
The latest price action shows a corrective momentum at the 20-day moving average, which worked as immediate resistance. Moreover, sellers' presence is visible from the 1.0279 resistance level, which may extend the momentum with a trend trading opportunity.
In the EUR/USD weekly outlook, any new swing low with a daily close below the 1.0135 level would be a bearish opportunity towards the 1.0000 level. On the other hand, bulls should recover the price above 1.0358 before considering it a bullish option.
GBP/USD showed a similar price action to EUR/USD, where the minor bullish correction is over within a long-term bearish trend. Moreover, the bullish price action has faded from the descending channel breakout as bulls failed to breach the 1.2050 key resistance level.
This technical analysis shows the long-term bearish pressure in the GBP/USD daily price, where bears made lower lows for several months. The recent price action shows multiple indecision candlesticks on the daily price, indicating that a strong breakout may open a trading opportunity.
Although the MACD Histogram is above the neutral line, there is no sign of divergence from MACD EMA’s. Based on this context, sellers’ has a higher possibility of winning the battle, as the current found the 20-day moving as a strong resistance. Therefore, a selling opportunity towards the target of the 1.1600 level is valid until bulls breach the 1.2050 level.
AUD/USD bulls managed to recover the price above the near-term resistance level of 0.6874, forming a bullish Quasimodo from the 0.6679 swing low. As a result, the trading range for AUD/USD is set from 0.7066 high to 0.6679 low.
This technical analysis shows the AUD/USD daily chart where the current price moved above the 20 EMA with a bullish daily candle. Moreover, the MACD Histogram shows a buy signal where the bullish price action above the 0.6877 static level and MACD divergence worked as confluence support.
Based on the weekly AUDUSD forecast, a reliable trading entry will come if the price shows bearish rejection from the 0.7066 to 0.7000 supply zone. On the other hand, any immediate selling pressure with a bearish daily candle below the 0.6870 level might decrease the price towards the 0.6747 level.
The USD/JPY bullish pressure has been running for a long-time with no action from the Bank of Japan. As a result, the price keeps increasing as if there is no barrier. However, the recent price showed some sellers' interest by taking it below the 20-day moving average level, which needs further indication to consider it a trend reversal.
This technical analysis shows the daily price chart of USD/JPY, where a divergence formed in the MACD line, with a daily candle below the 20 DMA. Still, there is no new swing low to confirm the bearish trend.
Based on the current weekly analysis, a minor bullish correction may appear during the weekly birth period, from where further selling pressure from the 137.30 resistance level could open a bearish opportunity towards the 133.00 level. On the other hand, recovery with a daily close above the 137.40 level could resume the current trend towards the 140.00 level.
XAU/USD bullish price action was solid from the 1682.77 swing high, which appeared with a descending channel breakout. However, the price failed to move above the dynamic 20 EMA and static 1744.66 resistance level.
This technical analysis shows the daily chart of XAU/USD where a strong buyers presence from the 1681.77 level with a bullish engulfing candlestick is present. Moreover, the MACD Histogram reached the neutral point, where a bullish recovery above the 20-day moving average could extend the upside momentum.
Based on the current price action, the upcoming FOMC would decide the future price of XAU/USD, where a rate hike could increase the volatility with several intraday swing violations. However, a solid bullish daily candle above 1750.00 is needed to see the price towards the 1772.36 level. On the other hand, the secondary approach is to wait for a solid bearish rejection from the 1744.66 level and reach the price towards the 1681.77 support level.
Bitcoin price action has become interesting as it faced the strongest trading volume since the beginning of 2022 at the 21692.00 level. Moreover, the strongest trading volume came with a bullish breakout from the daily 20 moving average. On the other hand, the long-term trend is still bearish, where any bearish daily candle below the 21692.00 high volume level would be an alarming sign for bulls.
BTC/USD price made a strong bullish recovery of 28% between 13 July to 20 July, where the daily candle above the 22500.00 resistance level flipped it into support. In that case, the chance of pushing the price up is high for this pair, where the main aim is to test the 25000.00 psychological level.
This technical analysis represents the daily price of BTC/USD, where the current price is above the dynamic 20 EMA. Furthermore, in the indicator window, the MACD Histogram remained in a positive zone for a considerable time, indicating buyers’ presence in the market.
According to the Bitcoin weekly technical outlook, a minor bearish correction is pending in the BTC/USD price where any bullish rejection from 21800.00 to 20500.00 zone would create a bullish opportunity. On the other hand, the break below the 20500.00 level could resume the existing trend where the primary target would be the 17663.24 level.
Investors should keep a close eye on the FOMC statement, where the current expectation is a rate hike of 75 bps. However, any dovish sentiment from the Fed regarding the higher inflation could make the market volatile, where close attention to trade management will be needed.