The Fed is especially concerned about service inflation, and Chair Jerome Powell recently stated that there had been no progress in that area when housing components were excluded. The core PCE price index, which the Fed pays more attention to, will also be closely watched, and any surprises could affect the chances of a rate hike in May.
Consumer confidence, personal consumption, housing indicators, Q4 GDP, and the Chicago PMI are also important indicators to watch. Market sentiment remains fragile after recent bank failures, and investors may react negatively to strong data because it gives the Fed less reason to be cautious. Even in the most optimistic scenario, the Fed's terminal rate has permanently shifted lower, limiting any potential impact on the US dollar.
Forex Technical Outlook for 27 March 2023 to 31 March 2023
Inflation data will dominate this week, with flash CPI readings for the eurozone and PCE inflation figures for the United States being the most closely watched.
The market will also be watching inflation data from Australia and Japan. Central banks have been focused on maintaining price stability during these turbulent times; any unexpected rise in inflation could cause a stir in the markets.
Let’s see important releases for this week:
- BOE Gov Bailey Speaks on Monday
- The US CB Consumer Confidence on Tuesday
- AUD CPI y/y on Wednesday
- German Prelim CPI m/m on Thursday
- The US Final GDP q/q on Thursday
- The US weekly Unemployment Claims on Thursday
- CAD GDP m/m on Friday
- The US Core PCE Price Index m/m on Friday
Now move to the weekly price forecast:
The week started with a bullish momentum, but buyers failed to hold the momentum due to the rate hike by the Fed.
Although the selling pressure was strong in the last three trading days, the overall outlook is still bullish for the EUR/USD pair.
There was an upside pressure above the February 2023 open price, but an immediate recovery was seen. The weekly candle closed bullish, but there was a wick upside, indicating indecision.
The price is still bullish as the long-term buy rally is still valid. Despite the downside correction in the previous week, a bullish rebound from the 1.0608 to 1.0481 demand zone, came with a confluence of support with the dynamic 100-day SMA.
Based on the current high volume level, the largest activity level since February 2023 is seen at the 1.0676 level, which is below the current price. Therefore, before initiating a sharp bearish trend, this pair must violate multiple support levels, which needs a new high-volume level formation.
The strength of the current downside pressure is not supportive of the indicator window, as the current ADX is below the 20.00 level.
Based on the current price outlook, a bullish recovery might come from the dynamic 20 EMA or near-term demand zone. On the other hand, the invalidation level is at 1.0481 level, as breaking below this level could initiate long-term selling pressure toward the 1.0200 area.
GBP/USD went sideways after reaching last week’s target level as bulls found a barrier from the near-term supply zone.
A long wicked weekly candle shows sellers’ presence in the market, but more confirmation from the daily price is needed before opening any short position in the GBP/USD price.
The recent price is trading sideways since 14 January 2022, and a potential double top formation at the 1.2444 level is indicating selling pressure. The pattern is validated with a bearish Change of Character formation at the 1.1844 level. It also validated the supply zone of 1.2444 to 1.2318 area. In that case, the primary trading idea is to look for short opportunities as long as the price trades below this supply zone in the daily chart.
The sideways price action is supported by the dynamic 100-day SMA and the latest high volume level, which was flat for over a month. The indicator window shows the ADX level below the 20.00 level, which is signaling a corrective market momentum.
Based on the current price projection, GBP/USD could extend the downside correction towards the 1.2042 high volume level in the coming days. However, strong selling pressure with a daily candle below the 1.1844 level could invalidate the buying possibility by creating a room to test the 1.1400 level.
As per the previous weekly outlook, AUD/USD completed the bullish correction and formed multiple bearish daily candles closes towards the sellers side.
This technical analysis on the weekly timeframe shows a clear bearish possibility as a strong impulsive bearish wave backs the current sideways market.
In the daily price, the bullish correction is completed by reaching the 0.6756 level as a new resistance level. Therefore, the ascending channel formation with a new resistance indicates that sellers are still active in the market and can lower the price at any time.
The latest high-volume level from February also supports the bearish opportunity to March, which is at the 0.6724 level. The indicator window supports the bearish opportunity as the ADX level is above the 20.00 level, indicating a trending environment.
Based on the current outlook, any intraday bearish opportunity could lower the AUD/USD price below the 0.6564 support level soon. However, a bullish recovery with a candle close above the 0.6700 level could increase the possibility of moving above the 0.6756 level, which will invalidate the current bearish opportunity.
Despite the rate hike by the Fed, USD/JPY extended the loss by moving barely 1% to the sellers' side. Although a bullish rejection has appeared from last Friday’s close, the downside pressure can resume at any time.
This technical analysis indicates the daily price of USD/JPY, where the current price is trading at the discounted zone from the 137.92 high to the 129.74 low. It is a primary indication that bears have done their job and need a pause before regaining momentum.
The bearish trend trading opportunity is valid in this pair, but traders need confirmation about the bullish correction. The high volume level is above the current price, while the near-term resistance is at the 130.00 level, which could be a barrier for sellers.
The indicator window shows a strong trend trading opportunity as the current ADX is above the 20.00 satisfactory line.
In the coming days, any bearish rejection from the 130.00 to 130.20 area with a daily candle below the 20 EMA could extend the selling pressure in the USD/JPY price towards the 127.37 area.
On the other hand, a stable bullish break with a candle close above the 130.30 level is needed before aiming for the 135.09 resistance level.
As per the previous XAU/SUD outlook, the price reached the targeted 2000.00 level from where selling pressure is seen. However, the broader market outlook is still bullish, and investors need sufficient confirmations before opening any short position.
In the daily price of XAU/USD, a wicked bearish candle with two bear reversal patterns is seen from the psychological 2000.00 level.
It is a sign that sellers are regaining momentum, while a bearish correction is pending as a mean reversion to the dynamic 20 DMA.
An impulsive pressure may come in the coming week as the current ADX level is stable above the 20.00 level, indicating a stable trend.
Based on this structure, a downside correction is pending in the XAU/USD daily price, where the primary price target is the 1940.00 level. However, an immediate recovery above the 2000.00 level could eliminate the current selling possibility with a bullish trend continuation toward the 2020.00 level.
Although the current price outlook is bullish for the BTC/USD price, investors should see the on-chain metric to find the reliability of the buying pressure.
As per the latest data, short-term BTC holders have realized almost $292 million in profit, which was last seen in November 2021.
Another metric, the 365-day Market Value to Realized Value (MVRV), shows a recovery above the zero line and reached the 24.76% level. It is a sign that these investors can offload their assets anytime, which could initiate a bearish pullback soon.
The BTC/USD daily price is trading sideways at the 28,830.00 resistance level, which is signaling a possibility of a bearish correction to the 20 DMA or static 25228.50 level.
The long-term trend of the BTC/USD is bullish as the current 100-Day SMA is below the current price, with the latest high volume level at 24,776.00 level.
In the indicator window, the current ADX level has been above the 20.00 line for a considerable time, which signals a stable trend.
Based on the current outlook, a bullish break above the 28,800.00 level could extend the current trend towards the 34,000.00 level. However, breaking below the 26,610.00 level with a bearish D1 candle could lower the price towards the 24,000.00 level.
This week, a clear price direction may come after the Consumer Price Index (CPI) data. Moreover, it will provide an early sign of the coming Non-farm payroll and central banks' decisions.