The FOMC left the monetary policy unchanged but indicated a forthcoming tapering on bonds purchased. Meanwhile, the housing data for August came with a mixed sentiment but still within a vigorous activity. The Leading Economic Index (LEI) remained stronger in August, indicating that the economic recovery is still intact despite the delta variant and supply chain constraints. This week, the critical economic event includes the Durable Goods Orders, Personal Income & Spending with ISM Manufacturing PMIs. Overall, analysts’ expectations remained strong that may keep the US Dollar’s dominance stable.
Several G10 banks will have a monetary policy this week where Norway's central bank may raise the interest rate by 25 bps on the European front. On the other hand, there is a possibility of a tightening policy by BoE to hike the rate in May and November 2022.
On the Asian side, the volatility comes from China’s Largest Real Estate Developer, Evergrande, who could default on its debts. As it has a sheer size in the real estate sector to China’s economy, any possibility of getting default could weigh on China’s financial market and the global economy.
Forex Technical Outlook for 27 September 2021 to 01 October 2021
After a volatile week, investors will experience a monthly shift where the price action may show a reversal momentum due to monthly profit-taking. In that case, traders should have strong trade management besides focusing on key events like ISM Manufacturing Index, Canadian GDP, US PCE Price index, and BOE Gov Bailey Speaks.
The US Dollar index remained strong as the price failed to breach the 4th August low of 91.81 and rebounded higher with a bullish weekly close. However, the price is still below the 20 August high of 93.73, where a potential supply level is present.
EUR/USD remained stable below the dynamic 20 EMA, but the most recent candles showed a corrective momentum that decreased the possibility of breaking below the 1.1700 key level. Moreover, the intraday price remained volatile, where several violations in intraday swings were in play. As a result, considering the current price action and monthly decrease period, we are expecting a bullish movement in the EURUSD until the price breaks below the 1.1700 level with a bearish daily close.
The above image shows how the MACD Histogram became corrective despite the bearish sentiment. Therefore, any new higher low in the MACD Histogram would increase the bullish possibility in the price towards the 1.1850 level. Conversely. A break below the 1.1700 level would find next support at 1.1600 level from where bulls may attempt again depending on the price context.
Like the EUR/USD, GBP/USD remained below the dynamic 20 EMA with bearish momentum. Moreover, the price tried to break above the dynamic resistance on Thursday but failed to hold the pressure. As a result, the price came down and closed with a bearish daily candle on Friday.
The image above shows how the price reached 1.3600 key supply for the third time in the last three months. Therefore, investors should closely monitor the effectiveness of this zone. As per the current market context, any break below the 1.3600 level with a bearish D1 close may push the price down towards the 1.3400 area.
However, the price is still above a strong demand zone from where bulls may attempt again. In that case, the buying possibility will be strong if the price moves above the dynamic 20 EMA with a bullish daily close.
AUD/USD bulls were another loser that moved down below the dynamic 20 EMA, followed by the broader US Dollar strength. Moreover, the price spent 8 consecutive trading days below the 0.7300 key event level and closed the week with rejection from dynamic 20 EMA and a bearish daily close. Therefore, as long as the price is trading below the 0.7300 level, it is more likely to come down.
Investors should not ignore the monthly decrease period despite the bearish possibility while the MACD Histogram is making new higher lows. In that case, bulls should wait for a positive daily candle above the dynamic 20 EMA to consider the buying possibility as valid. In that case, the primary target would be a 0.7430 resistance level.
The smell of a breakout is found in the USD/JPY, where a bullish rejection from the 109.20 to 109.00 demand zone showed massive consecutive three bullish daily closes at the 110.72 resistance level. In the meantime, the MACD Histogram turned bullish and aiming higher.
Based on the daily price context, USDJPY has two possibilities. As the current price faces resistance, the week may start with a bearish correction followed by the monthly decrease period. On the other hand, any straight bullish move towards the 111.55 area may influence bears to start a downside pressure towards the 110.00 area.
The bearish possibility in XAU/USD is vital as the price moved below the 1783.0 event level with a strong bearish breakout and made a new swing low in the daily chart. Therefore, as long as the price is trading below the 1783.00 event level, it is more likely to move down and test the 1723.46 support level in the coming days.
The MACD Histogram is bearish in the indicator window and made a new low after a correction, indicating intense selling pressure. In that case, investors may experience a bullish correction at the beginning of the week. Still, any bearish rejection from the intraday chart would increase the selling possibility where the ultimate target is testing the 1734.46 level.
A lot of uncertainty is hovering in the air of cryptocurrency where the Bitcoin price moved below the 45000.00 level with an impulsive bearish pressure last week. Moreover, the price grew higher but failed to move above the 45000.00 level. Therefore, as long as the price is trading below the 45,000 level we may expect more bearish pressure to come.
The above image shows how the price moves below the dynamic 20 EMA where the MACD Histogram remained bearish. However, the most recent exhaustion from the 41500 support level is the only barrier for bearishness. In that case, a bearish daily close below the 41500.00 level may open rooms for 37410.47 level to test this week.
Overall, the ISM Manufacturing PMI and CAD monthly GDP will remain effective for the price movement among essential releases. On the other hand, the US Dollar dominance may extend this week where investors should consider the volatility from the monthly closing.
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