Last week, the Federal Reserve provided a less hawkish statement where the primary intention was to maintain a low rate and repurchase for a longer-term.
The inflation rate moved to a record high where aggressive monetary policy was the key to understanding it. Currently, the Fed expects the core inflation to remain above 2.7 percent in 2022, and above 2 percent for the next 2-3 years. Therefore, the CPI might stay 3-4 percent within that time, with a broader risk for wages, family savings, and other investments.
On the other hand, the bond-buying program by the Fed will be resumed in January that will accelerate the rate hike from 2022 to 2024 to reach 2.1 percent in 2024.
Despite the accommodative monetary policy by the Fed, the European Central Bank maintained an aggressive monetary policy, negative rates, for three decades. If the ECB keeps its vast asset purchase program and negative interest rates, the inflation tax and economic slowdown might work as stagflation to the Eurozone economy. Now, investors should closely focus on whether the ECB continues the inflation bubble or chooses to regain monetary sanity. For investors to shake, choosing the latter would be a good decision.
Forex Technical Outlook for 27 December 2021 to 31 December 2021
The coming trading days are mostly muted due to the Holiday session. Therefore, the economic calendar has less important releases where the price in the currency chart will remain volatile. Bank holidays in Japan, Canada, Australia, and the US will have less liquidity in the market. However, this week, Japan’s employment report and core CPI y/y, US trade balance, and Swiss KOF Economic Barometer would be the main economic events.
The US Dollar index remained corrective at the 96.88 swing high where the failure to break and multiple tests to the dynamic 20 EMA support are signs of bears interest in the chart. In that case, a new swing low below the 95.45 level is important before showing a selling pressure from the 96.00 to 96.88 zone. In that case, the primary target would be towards 94.12 to 93.70 demand area.
EUR/USD continues the volatility by remaining corrective at the dynamic 20 EMA area. Despite the bearish daily candle close from the dynamic 20 EMA rejection, the price failed to make a new swing low. The extreme volatility from the bottom, a long-term bearish trend, is a sign of a possible bullish pressure in the coming days.
The above image shows that the dynamic 20 EMA remained closer to the price where the near-term static resistance is at 1.1375. Therefore, a bullish pressure with a daily candle close above 1.1375 would increase the bullish momentum towards the 1.1594 area. On the other hand, any intense selling pressure from the 1.1375 with a bearish daily candle close below the dynamic 20 EMA would increase the bearish possibility towards the 1.1200 area.
GBP/USD bulls are solid in the market as the recent price showed bullish pressure from the falling wedge breakout. Later on, sellers tried to regain the momentum, but the bullish rejection form 1.3172 and a daily candle above the dynamic 20 EMA changed the market sentiment.
The above image shows that the MACD Histogram remained extremely bullish where the current price is stable above the dynamic 20 EMA. Therefore, based on the current price context, an intraday bearish correction is pending where the price may come down towards 1.3267 to 1.3200 area. However, as the price made a bullish break of structure from the 1.3370 swing high, the bullish possibility is valid towards the target of the 1.3519 level.
AUD/USD bulls showed an amazing bullish recovery where the recent price formed a W reversal pattern and moved the daily candle above the dynamic 20 EMA and static 0.7175 level. Therefore, as long as bulls hold the price above the 0.7175 level, it is likely to extend the bullish pressure towards the 0.7412 level.
The above image shows that the MACD Histogram remained bullish where the price made a new swing high. Therefore, any further bullish rejection from the 0.7175 static level would be a potential buying opportunity in this pair with the target towards the 0.7412 area. On the other hand, a bearish daily candle below the 0.7100 area needs close attention for taking a sell trade.
USD/JPY remained corrective throughout the week, where the most recent price moved above the dynamic 20 EMA with a daily candle close. As the price approaches the static 114.47 resistance level, any bearish rejection would be a potential selling opportunity in this pair.
The above image shows that the MACD lines made consecutive lower lows while the price made a swing high above the 115.00 level. Therefore, sellers’ interest in this pair will increase if a bearish rejection candle appears from the 114.47 static resistance with a bearish daily candle below the dynamic 20 EMA. In that case, the primary target would be the 112.71 area.
XAU/USD resumed the corrective momentum due to the less traders’ activity in the price. As a result, the price moved lower from the bearish pressure at the 1813.68 resistance level but failed to hold a strong momentum below the dynamic 20 EMA.
The above image shows that the MACD Histogram is bullish and approaching higher. Therefore, a bullish daily candle close above the 1813.68 level would increase the bullish possibility in the price where the primary target would be the 1840.00 area. Conversely, a daily candle below the dynamic 20 EMA would resume the selling pressure towards the 1760.00 area.
Christmas has appeared, and like other years, it is a bullish time for the broader crypto market. Moreover, the amazing recovery in the BTC/USD price with a daily candle above the dynamic 20 EMA is a sign that bulls are interested in taking the price higher above the 53,522.51 level.
The above image shows how the MACD Histogram made new higher highs with bullish price action in the chart. In that case, the primary target for the current bullish pressure is the 53,522.51 level. Moreover, if bulls take the price above this resistance, the next target would be towards the 60,000.00 area.
Overall, investors are experiencing a holiday break where less trading activity in the price chart is highly possible. In that case, traders should closely follow how the spread appears before opening any trade.