The European Central Bank and Bank of Canada will meet this week, where investors may experience a dovish sentiment from the ECB. In the latest September meeting, the ECB announced a slower pace of the PEPP bond-buying program in Q2 and Q3. Therefore, the sidelined position from the rate hike may influence the ECB to maintain an accommodative monetary policy as the inflation remained relatively subdued. Therefore, the possibility of a rate hike depends on how the ECB is getting out of the PEPP program in 2022.
On the other hand, the Bank of Canada will meet and assess the monetary policy where reducing the asset purchase program is highly possible. Based on the recent economic releases, Canada is doing well where the COVID crisis is almost over in the past few weeks. The recent inflation data showed that the price growth is still elevated and above the BOC’s target range. Therefore, investors should see how the CPI is coming in this quarter. Moreover, the BoC will expose the central bank’s economic projection to show a hawkish sentiment with an evolving economy.
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Forex Technical Outlook for 25 October 2021 to 29 October 2021
This week, the US Dollar may remain muted with the absence of important releases, but the Q3 Real GDP and Durable Goods will focus. There are Quarterly CPI from the RBA, BOJ Outlook Report, and Canadian GDP, among other important releases.
The US Dollar index remained corrective with a Hidden Divergence with the MACD Histogram. However, the price is still trading above the 93.50 event level, where any bullish daily close above the dynamic 20 EMA may resume the current trend. On the other hand, investors should monitor how the US releases are coming where a bearish sentiment below the 93.50 level will open rooms for testing the 92.00 area.
EUR/USD bulls have found a bottom at 1.1526 level from where a bullish engulfing candle changed the market sentiment. However, the week’s price ended by remaining below the 1.1670 event level and failed to move below the dynamic 20 EMA. In that case, a bullish daily close above the 1.1670 may push the price higher towards the 1.1760 level, which is the 61.8% retracement level of September high to October low.
The above image shows how the EURUSD price is trading where the MACD Histogram remained bullish and aiming higher. Therefore, bulls have a higher possibility of taking control over the price in the coming days. On the other hand, a stable bearish daily close below the dynamic 20 EMA may influence bears to test the 1.1526 area.
GBP/USD resumed the bullish pressure last week, followed by the hawkish sentiment from the Brexit development. However, the bullish swing from 1.3410 low almost recovered the swing with a new lower low formation. The current price is near 1.3910 to 1.3860 supply zone from where bears may regain momentum. Therefore, the upcoming sentiment for the GBPUSD will be bearish until bulls take the price above the 1.3900 level.
As per the above image, the MACD Histogram is bullish but losing its momentum while the price showed two consecutive bearish daily candle’s in the last two trading days. Therefore, a small bullish correction may happen at the upcoming weekly birth period, but any bearish rejection from 1.3750 to 1.3800 would be a good bearish opportunity with the target of 1.3600 level. On the other hand, a stable bullish daily close above the 1.3910 may alter the current market structure and higher the price towards the 1.4200 area.
AUD/USD moved higher, followed by the bullish sentiment from its peer currency NZD but failed to have a strong bullish sentiment above the 0.7476 level. Therefore, the price ended the week with a bearish daily close below the resistance, opening room for further bearish correction.
As per the above image, we can see that the gap between the price and dynamic 20 EMA is expanded, which may initiate a bearish pressure as a mean reversion. On the other hand, the price formed a Hidden divergence with the MACD Histogram, which is another reason to rely on a bearish pressure. Overall, investors may experience the AUD/USD to come lower towards the dynamic 20 EMA until the price breaks above the 0.7550 level with a strong bullish daily close.
As expected, USD/JPY found the multi-year resistance level at 114.54 level from where bears became interested. As a result, the price formed an indecision candle at the 114.54 resistance and moved lower by creating new intraday swing lows. Therefore, as long as the price is trading below the 114.54 level, the upcoming direction might be bearish.
The above image shows the MACD Histogram remained bullish for a considerable time and reached the zero level, which is a sign that the price may initiate a correction. On the other hand, a test of the dynamic 20 EMA is still pending before resuming the current bull run. In this context, investors may experience bearish pressure towards the 112.00 level in the coming days. Therefore, any intraday bearish rejection from 114.00 to 114.50 would be a good bearish entry, but a daily close above the 114.54 level may invalidate the bearish possibility.
The inflation pressure is keeping the XAU/USD demand solid where the store value of Gold is in play. Therefore, Investors may experience a solid bullish pressure in Gold as the price failed to break below the dynamic 20 EMA with a bearish daily close.
The above image shows that the MACD Histogram remained bullish where the MACD line is moving up. Therefore, the bullish possibility is valid until the price is breaking below the 1770.00 level with a bearish daily close.
The BTC/USD bullish rally stopped with a strong bearish engulfing candle in the daily chart as soon as the price reached the psychological 65,000 level. Therefore a small correction became pending where the price may test the dynamic 20 EMA or static 57340.00 level before showing another bullish leg.
The above image shows that the MACD Histogram turned bearish with a hidden divergence that may influence the bearish pressure in the coming days. However, any bullish rejection from 57000.00 to 55,000.00 would be a great buying opportunity. However, a bearish daily close below the 52,785.00 level may alter the current market structure and initiate bearish pressure.
Overall, the US Dollar may remain corrective this week where other peer currencies may gain momentum. Investors should closely monitor how the ECB and BOC provide their economic projections. Any hawkish tone would be a great opportunity to open trades against the US Dollar.