Forex Forecast & Forex Technical Outlook for 28 August 2023 to 01 September 2023

The US durable orders appear to stagnate due to rising mortgage rates, which pressure the housing market. Simultaneously, preliminary benchmark revisions from the BLS indicate that the labor market's strength is not as intense as previously believed.

The PMI surveys released last week for Europe highlight the growth challenges facing the continent's main economies and the potential for renewed Eurozone instability. Notably, the service sector PMIs for August have entered contraction territory, with the Eurozone services PMI falling to 48.3 and the United Kingdom services PMI falling to 48.7.

Some observers are concerned about the accumulation of debt in China's real estate sector and its potential to provoke a significant economic downturn in the second-largest economy in the world. 

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Forex Technical Outlook for 28 August 2023 to 01 September 2023

Let’s see the list of events to look at this week:

• RBA Gov-Designate Bullock Speaks on Tuesday
• S&P/CS Composite-20 HPI y/y on Tuesday
• CB Consumer Confidence on Tuesday
• JOLTS Job Openings on Tuesday
• AUD CPI y/y Wednesday
• German Prelim CPI m/m on Wednesday
• ADP Non-Farm Employment Change Wednesday
• US Prelim GDP q/q on Wednesday
• CNY Manufacturing PMI on Thursday
• Core PCE Price Index m/m on Thursday
• The US Non-Farm Employment Change on Friday
• The US Average Hourly Earnings m/m on Friday
• ISM Manufacturing PMI

Let’s see the market outlook from the weekly forecast:

EUR/USD

As per the previous weekly outlook, EUR/USD extended the bearish pressure throughout the week. However, investors need more clues to consider it as a strong downside pressure throughout the week.

The EUR/USD price showed a free fall throughout the week, extending the loss from the 1.1275 level to the 1.0769 level.

As per the weekly price action, the recent price converged with the flat 20 SMA, while bulls tried to defend the 100 SMA level. Meanwhile, the Momentum Indicator shows an indecision as it remained unchanged at the 100 level. The RSI remains bearish below 50.00, anticipating a downside movement ahead. 

In the daily chart, the 200-day Moving average is bullish at the 1.0790 level. Meanwhile, the price started pushing below the 100 and 20-day SMA levels, crossing below the 1.0910 level. Other technical indicators remained extremely bearish at the oversold zone, while the price made consecutive lower lows in the daily chart. 

As the weekly candle trades below the 1.0800 critical level, we may anticipate a downside continuation in the coming days toward the 1.0732 level. Moreover, breaking below this level could lower the price towards the 1.0660 level. 

The near-term resistance is found at the 1.0840 level, where a bullish break above this level with a D1 close could increase the price toward the 1.1000 level. 

GBP/USD

The Pound Sterling ended in the 200 pips range, where the US Dollar won. Now, investors will see how the US Non-farm payroll comes in the holiday-shortened week.

The downside pressure in the GBP/USD price came from the sellers' presence at the 50-day Simple Moving Average level at the 1.2785 area. The bearish pressure came with a hammer formation in the weekly chart, breaking below critical supports of 1.2725 and 1.2640. 

In the 14-day RSI level, the current reading is at 35.00, which is below the 50.00 neutral line. It is a sign of further downside pressure in the price until the RSI reaches the 30.00 level. 

Regarding the bearish trend continuation, the 1.2400 level could be a major barrier for investors, where the 200-day SMA remains as confluence support. Below this level, the downside momentum might extend toward the 1.2308 support level. 

It will be the last week of the month, where profit-taking from USD bulls could be a long signal in the GBPUSD price. Primarily, a bullish daily candle above the 1.2785 resistance level could indicate a bullish signal, anticipating the target at the 1.2995 level. 

AUD/USD

The Australian Dollar was beaten by the US Dollar throughout the month, while there was no sign of a bullish recovery until the latest weekly close. However, a monthly shift with the Non-farm payroll release is pending, which might provide a clue about this pair.

As per the weekly price of the AUD/USD pair, the broader market direction is bearish, while the latest weekly candle closed sideways as an inside bar. In that case, the ideal trading approach is to wait for a bearish trend continuation with an appropriate trading strategy.

The 100 SMA and 20 EMA are above the current weekly price, where the RSI is yet to reach the 30.00 level. It is a sign that bearish momentum is still strong, and there is no sign of a divergence. 

In the daily chart, the price reached the 161.8% Fibonacci Extension level from the 0.6600- 0.6891 zone, at the 0.6427 level from where a bullish correction is possible. 

On the bullish side, a stable recovery above the 0.6500 level could extend the momentum towards the 0.6715 resistance level, while a bearish rejection from the dynamic 20 EMA or static 0.6480- 0.6430 area could extend the bearish pressure at the 0.6300 level.

USD/JPY

A strong bullish recovery came in the USD/JPY pair, showing strong buyer presence from the 145.00 key support level. As the Non-farm payroll is pending release in the next week, investors should wait for a strong anomaly before anticipating a trend change. 

In the weekly timeframe of the USD/JPY price, a bullish continuation is valid, whereas a downside correction is pending. The dynamic 20 EMA and 100 SMA levels are way below the price, which indicates a mean reversion.

In the daily chart, the price found support at the 145.00 level, from where a bullish two-bar reversal was found as a trend continuation opportunity. The Dynamic 20-day EMA provides a confluence support at the 155.00 level, while the 100-day SMA is below these levels.

The current 14-day RSI shows a stable pressure above the 50.00 level, which increases the possibility of testing the 70.00 level.

On the bullish side, any immediate bullish signal could increase the price towards the 148.32 resistance level. On the other hand, the bearish momentum needs a solid break below the 144.40 level before anticipating the 140.00 level. 

XAU/USD 

The XAU/USD price opened the month with a bullish week but failed to maintain momentum after Powell’s hawkish speech. The current fundamental outlook is positive for the US Dollar, which could result in a bearish monthly close in Gold.

The XAU/USD price remained steady above the 1885.00 critical support level and dowed a strong bounce from this level. However, it created resistance at the 1925.00 level, from where a downside pressure came on last Friday. 

As per the weekly chart, the price is trading below the 20 SMA level, whereas a bullish Weekly candle above the 1935.00 level could indicate a negative momentum. The upward pressure may extend toward the 1950.00 critical level in that case. 

As per the previous weekly candle close, the downside pressure is potent in this pair, where a bearish pressure below the 1885.00 level could lower the price to the 1850.00 psychological level. 

In the daily price, the bullish correction has lost momentum as the price moved below the 1920.00 level. As the current D1 chart faces bearish momentum from the 20-day EMA, a bearish candle below the 1900.00 level could push the price even lower.

BTC/USD

The quarterly historical performance of Bitcoin's price provides a nuanced perspective. As per the findings, the third quarter (Q3) represents BTC's weakest performance period. The aggressive selling pressure on August 17 may have caught many investors off guard, but it echoes historical patterns. September has historically been the least profitable month for BTC over its 12-year existence, with an average negative return of -5%.

Over the past year, Bitcoin's Market Value to Realized Value (MVRV) ratio has remained stable at approximately 5.61 percent. It indicates that long-term investors are still profitable. However, the MVRV ratio over the last 30 days is -6.78 percent, indicating that the collapse on August 17 has already forced these holders to liquidate their assets.

In contrast, interpreting the current MVRV metrics reveals that short-term holders are likely compelled to sell. However, long-term holders have not yet been substantially impacted. Consequently, any further decline in Bitcoin's price would compel these long-term investors to quit their positions.

The latest weekly candle shows a bearish trend continuation opportunity as it holds the bearish momentum from the previous week. Also, there is no sign of buyers' presence in the weekly close area.

The W1 price came with a bearish candle close below the 20 EMA, while the 100 SMA was at the top. However, the price faces an ascending channel support, from where a bullish correction is possible. 

The daily chart shows a bearish crossover among 20 and 100 SMA levels, while the Relative Strength Index (RSI) was below the oversold 30.00 level. In that case, a daily candle close below the 24,802.84 level could be an alarming sign for bulls.

This week is going to be eventful with a monthly shift. Therefore, a stable trend might come after releasing the Non-farm payroll.

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