Federal Reserve Chair Jerome Powell testified before Congress last week, noting that economic activity has been resilient in the face of higher interest rates. However, he also said that more work needs to be done to achieve the Fed's 2% inflation target.
Powell's testimony came as the housing market remains a dominant theme in the financial markets. While housing prices have begun to cool, they are still holding up relatively well in the face of higher interest rates. This suggests that the housing market may not be as sensitive to interest rates as some had feared.
Last week, the Bank of England (BoE) increased interest rates in the UK by 50 basis points to 5.00%. The BoE's rate increase was the biggest since 1997. Concerns about increasing inflation, which is now running at a 40-year high, were the driving force behind the BoE's decision.
As investors have grown increasingly risk-averse, credit conditions have recently tightened in the United States. Commercial banks' loans and leases have decreased as a result of this. When deciding on the future course of interest rates, the Fed will consider this.
The Fed is dedicated to reducing inflation despite the unclear economic picture. In the upcoming months, the central bank will probably continue to hike interest rates, but it must weigh the dangers of slowing the economy against the need to keep inflation under control.
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Forex Technical Outlook for 26 June 2023 to 30 June 2023
Let’s see the list of events to look at this week:
- CAD CPI on Tuesday
- CB Consumer Confidence on Tuesday
- BOE Gov Bailey Speaks on Wednesday
- BOJ Gov Ueda Speaks on Wednesday
- Fed Chair Powell Speaks on Wednesday
- German Prelim CPI m/m on Thursday
- US Final GDP q/q on Thursday
- US Unemployment Claims on Thursday
Let’s see the market outlook from the weekly forecast:
The broader bullish outlook is questionable for the EUR/USD price as there is a bullish liquidity sweep, with a new lower low formation seen during the last trading week.
The EUR/USD price lost its buying pressure during the last trading week, where the current price action indicates further downside possibility.
According to the EUR/USD weekly chart, the strong gap between the price and 100-day SMA shows a bearish possibility towards the 1.0843 level.
In the meantime, other technical indicators have moved south; there is no sign of strong selling pressure with impulsiveness.
The current 61.8% Fibo Retracement level from the 2022 yearly swing is at 1.0745, which is far from the current price. It is a sign that bulls have a strong chance to take the price higher as long as the Fibo level holds.
In the daily price of EUR/USD, we can see a different story, where technical indicators are seen to become eased from their recent highs. However, a bullish crossover is present from 20 SMA at the 1.0800 key level. Therefore, holding will be critical, as any bullish rebound can create upside pressure in the coming days.
In the current price, the near-term resistance level is at 1.0930 level, just below the 1.1000 psychological thresholds. A bullish recovery above the 1.1000 level could be the potential to grab buyers' attention to aim for the 1.1180 regions.
As per the previous weekly outlook, GBPUSD showed a bearish correction within a strong bullish trend. The downward pressure may extend this week, but a bullish rebound is needed to find a strong trend.
The GBP/USD price is trading bearish on a short-term basis, while the broader market outlook remains strongly bullish.
According to the price action in the daily chart, the current bearish correction may extend in the coming days. Moreover, the current price holds momentum below the 1.2800 key psychological level. Therefore, the downside pressure may extend as long as the price trades below it.
Above the current price level, a bullish break and a D1 candle above 1.2850 is needed before forming a new multi-week high. However, the recent price shows strong selling pressure, where a bearish break below the 1.2700 level could be an alarming sign for bulls.
In the weekly timeframe, the buying pressure is potent above the 200-day SMA level. Moreover, technical indicators show a consolidation phase, which may end up with a bullish range extension.
In this price context, the 1.2360 and 1.2420 levels would be crucial for sellers as breaking below these levels could be an alarming sign for bulls.
AUD/USD bulls became weaker after breaching the 0.6800 key resistance level. The immediate bearish reversal from this level with a D1 candle below it managed to close the week below this level, wiping out all gains above it.
This technical analysis of AUD/USD shows a counted impulsive pressure on the bearish side. The weekly candle formed a strong bearish engulfing pattern eliminating all gains from the previous week. Also, the weekly close came below the 20 SMA, while the RSI shifted the direction below the 50.00 line.
In the daily chart, a bearish candle came below 100 and 20 simple Moving Average levels, with a rebound in the RSI from the 70.00 overbought level.
The new higher high formation above the 0.6800 level showed buyers' presence in the market. However, the validation of the buying pressure needs a rebound and another D1 candle above the 0.6800 level before aiming for the 0.7000 level.
The alternative approach is to seek selling pressure below the 0.6579 level, aiming for the 0.6400 psychological level.
The bullish pennant pattern breakout provided strong buying pressure in the previous week with more than 200 pips movement. Moreover, the upside pressure is still potent as the existing imbalance zone is still protected.
The bullish trend continuation pattern is still valid in the USD/JPY daily chart, where the current price trades within a critical inefficiency zone.
The dynamic 20-day SMA is below the price and working as an immediate support level, while the 100-day SMA is below this line. Moreover, the 14-period RSI reached the overbought 70.00 line, indicating strong bullish pressure in the market.
However, the gap between the price and dynamic 20 SMA has extended, increasing the possibility of a bearish correction.
Based on the current outlook, the bullish trend continuation needs a proper breakout above the 145.18 level. However, the previous week's primary buying pressure front could extend up to the 145.00 level before forming a downside correction toward the 20-day SMA level.
As per the previous commentary, XAU/USD corrective pressure is still valid, as the previous buying pressure failed to form the breakout from the falling wedge pattern.
The XAU/USD price showed extreme volatility in the recent trading days, where the current price is trading below the 100-day Simple Moving Average levels. Moreover, the current RSI for the 14 periods moved below the 40.00 line, which signals a selling pressure until it reaches the 30.00 oversold level.
On the bearish side, the current crucial level is at 1910.00, which is a valuable multi-week low, just above the 1900.00 key psychological level. As the current correction is on, a valid bullish breakout is needed within a falling wedge pattern before aiming for a long-term bull run.
Within the range, the current resistance level is at the 1940.00 area, which is a confluence trendline resistance besides the 100-day SMA.
According to a prominent crypto trader, Bitcoin price might hit new all-time highs in 2023. He argues that the next four months will be crucial for BTC price momentum and that the monthly candles need to be increasingly larger to keep in line with previous impulse periods.
Credible Crypto also points out that Bitcoin has successfully retested support on monthly timeframes and that $25,000 is now a potential springboard for a new parabolic advance. He believes that October is the most likely month for Bitcoin to reach new all-time highs.
Bitcoin price is still highly bullish, as the price moved higher from the channel breakout.
However, with the weekend approaching and trading volume declining, volatility will likely be absent soon. Additionally, the second quarter of 2023 is ending, potentially triggering a volatile move around the monthly close.
Moreover, the daily chart showed a sell-side liquidity grab before the buy formation, which is a strong sign of a bullish trend. As a result, a strong rally is seen above the 20 and 100-day SMA levels.
However, Bitcoin price will likely consolidate and form a range soon. A minor retracement to 28,545.00 seems plausible, but investors should be patient and trade cautiously in this timeframe.
Investors might expect a decent movement this week as there are no significant economic events to invalidate the technical analysis.