In the previous week, the US housing data highlighted the continuing effect of elevated mortgage rates and a limited housing supply on market activity. Claims for unemployment insurance remained low, but indicators such as the Leading Economic Index (LEI) on a downward trajectory and rising Treasury yields and oil prices indicate a possible slowdown in economic development over the next few months.
It was a particularly eventful week for G10 and emerging market central banks on the global stage. Various central banks issued decisions and messages that varied. In response to varying economic conditions, central banks in emerging markets implemented a combination of rate increases, rate holds, and rate decreases. Some G10 central banks opted for rate increases while others held steady, with differing signals regarding the likelihood of future monetary tightening.
During the past week, the Federal Open Market Committee (FOMC) in the United States maintained the federal funds rate target range at 5.25% to 5.55%. Even though rates remained unchanged, the Committee maintained a hawkish stance. Notably, the median projection for the target range's midpoint at the end of 2024 increased from 4.625% in June to 5.125%.
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Forex Technical Outlook for 25 September 2023 to 29 September 2023
Let’s see the list of events to look at this week:
- German Ifo Business Climate on Monday
- CB Consumer Confidence on Tuesday
- AUD CPI y/y on Wednesday
- German Prelim CPI m/m on Thursday
- Spanish Flash CPI y/y Thursday
- The US Final GDP q/q on Thursday
- The US Unemployment Claims on Thursday
- CAD GDP m/m on Friday
- CNY Manufacturing PMI on Friday
Let’s see the market outlook from the weekly forecast:
In the previous weekly market summary, the market structure remained bearish after moving below the critical monthly low. A bullish reversal is possible because the current price is within a crucial liquidity zone.
The US Dollar closed bullish against the basket of currencies, although the US Dollar index is yet to test the important resistance at the 105.89 level.
In the weekly chart, the EUR/USD moved below the 100-week SMA level for the first time since May 2023. Moreover, the 20-day EMA is above the longer one, indicating a selling pressure.
The momentum indicator remains below the 100.00 line, while the current RSI is bearish below the 40.00 line, indicating a selling pressure.
Based on technical indicators, the EUR/USD price develops below important SMA levels, while the current 20 EMA is heading firmly south in the daily price. Finally, technical indicators became stabilized at negative zones, with no sign of creating a bottom.
Based on the EUR/USD weekly forecast, the near-term support level is at 1.0640, which was the crucial zone to overcome. Therefore, if the price comes below this level and forms a strong bearish D1 candle, we may expect the downside pressure to continue towards the 1.0520 level.
On the bullish side, a V-shape recovery with a stable price above the 1.0700 level could indicate a bullish rally towards the 1.0820 level.
The broader US Dollar’s strength pushed pressure towards GBP bulls. In that case, a bullish recovery might come after a counter-impulsive pressure.
In the weekly price of the GBP/USD, the price is moving down with an impulsive pressure, where the 161.8% Fibonacci Extension level from the near-term swing is at the 1.1718 level. Moreover, the weekly RSI is heading downwards at the 40.00 line.
In the daily chart, the price moved below the 200-day SMA level, indicating a strong downside momentum for the coming days.
In the indicator window, the 14-day RSI reached the oversold zone, indicating a strong sellers’ presence in the market.
Therefore, if the price becomes stable below the 200-day SMA, the downside pressure could extend towards the 1.2000 level.
On the bullish side, a strong bullish recovery with a daily candle above the 1.2548 weekly high could be a conservative bullish recovery.
The AUD/USD price extended the price consolidation where a strong bullish rebound needs more clues from the price action. However, investors should keep a close eye on the Australian CPI, which could be the key event for this week.
In the weekly timeframe, the AUD/USD price trades within a consolidation, backed by an impulsive bearish pressure. A minor upside pressure is seen from the flat dynamic 20-week level, while a bullish rebound in RSI is visible without testing the 30.00 level.
In the daily price, the most active level since the 13 July peak is just below the current price, at the 0.6436 level. As the current price is trading within a consolidation, supported by a bullish volume, we may expect a strong bullish trend in the coming days after a valid signal.
The dynamic 20-day EMA is below the current price, while the current 14-day RSI is above the 50.00 line.
Based on the current AUD/USD market outlook, a potential diamond price pattern is visible in the daily chart, where a bullish D1 candle above the 0.6520 level could indicate a bullish reversal targeting the 0.6739 level.
On the bearish side, a trend continuation could be potent if the daily candle comes below the 0.6356 level, which could lower the price towards the 0.6200 psychological level.
The USD/JPY continued pushing higher, as shown in the previous weekly outlook. However, the buying pressure is still solid even if the price is at a yearly high.
USD/JPY's bullish momentum is solid in the weekly price, initiated from the 137.15 bottom. Throughout the previous week, there was no sign of a bearish continuation, which could result in a bullish re-accumulation this week.
However, the weekly 14-period RSI approaches the overbought 70.00 level, with a gap between the current price and dynamic 20-week EMA.
In the daily chart, a bullish trend continuation is visible from the 20-day EMA carry, while the current high volume level is below the current price.
Based on the weekly price outlook, USD/JPY bullish continuation could reach the 149.90 level, which is the 161.8% Fibonacci Extension level from the existing swing level.
On the other hand, a bearish recovery with a daily candle below the 145.00 level could extend the bearish pressure towards the 142.00 level.
The Gold price closed the week with corrective pressure after a firmer downside FOMC move. Now the investor's attention will be towards the US GBP, which might gauge the future price of XAU/USD.
In the weekly chart, the XAU/USD price remains unclear, but the 20-week SMA is still above the current price. Moreover, the 1900.00 level is a very crucial area for this structure, and the current price is still above this level.
The price is squeezing to the symmetrical triangle formation in the daily chart, while the current 20-day EMA is flat at the current level. Moreover, the most active level since the 3 May high is working as a confluence level at the 20 EMA level, suggesting a consolidation.
Based on the weekly outlook, a bearish recovery and a bullish reversal from the triangle support could be a long signal, targeting the 1947.00 level. On the other hand, a bearish D1 candle below the 1900.00 level, could lower the price towards the 1880.00 level.
Bitcoin (BTC) holdings on prominent cryptocurrency exchanges such as Coinbase, Binance, and Kraken are currently at their lowest level in nearly six years, according to data from CryptoQuant. This decline coincides with a period of market stabilization after August, and the first half of September witnessed significant losses.
According to the data provided, these exchanges possess a total of 2.09 million BTC. Notably, the maximal supply of Bitcoin is capped at 21 million coins, and by the end of 2023, there will be approximately 19.7 million BTC in circulation.
On the surface, the decline in Bitcoin stored on exchanges could be interpreted as favorable, indicating a strengthening market and rising price expectations.
The decline in BTC held on exchanges has been ongoing since 2022. Still, it accelerated in November, coinciding with the collapse of the once-popular cryptocurrency exchange FTX.
The SEC filed lawsuits against Binance and Coinbase in June, alleging that these exchanges sold unregistered securities to their customers.
In recent months, the U.S. division of Binance has encountered a number of controversies, including significant layoffs, enormous workforce reductions, and operational disruptions. As a result of the avalanche of negative news, the trading volume on Binance.US fell by over 95%.
In the daily price, BTC/USD is trading above the dynamic 20 EMA with an emerging liquidity above the current trendline. In that case, a bullish recovery should come with a daily candle above the trendline resistance before reaching the 30,000.00 level.
On the other hand, a bearish pressure with a daily close below the 24,800.00 level could extend the loss towards the 22,000.00 area.