The second estimate of the Q2 real GDP for the US economy showed a 0.6% decline quarterly, up from the 0.7% drop in the first report. New home sales were down by 12.6% in July, following the existing downside pressure on housing activities. Durable goods remained flat in July while personal income and spending improved.
The Federal Reserve Chairman Jerome Powell spoke on Friday, showing the key focus of the bank is to bring inflation to the 2% target level. The overarching focus on controlling inflation might affect the household and businesses, as said by the Fed. The immediate action after Powell's speech was pulling capitals out of the crypto market. More than $42 billion dollars were wiped out from the crypto market as investors prepared for the heavy burden of inflation.
Last week’s data from the Eurozone provided an insight into this year's higher inflation. The Services PMI for August came higher than the expectation, while the manufacturing PMI eased. In the UK, the August PMI showed some resilience, despite the weaker manufacturing PMI.
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Forex Technical Outlook for 29 August 2022 to 02 September 2022
The week will start with a corrective momentum on Monday with no important releases, but on Tuesday, investors will see German Prelim CPI m/m before the CB Consumer Confidence. However, the key event for the week will be Non-farm payroll, which is set to release on Friday.
The list of major economic events to watch for 29 August 2022 to 02 September is shown here:
- German Prelim CPI m/m on Tuesday
- CB Consumer Confidence on Tuesday
- CHF CPI on Thursday
- ISM Manufacturing PMI on Thursday
- US Average Hourly Earnings m/m
- Non-Farm Employment Change
- US Unemployment Rate
Before moving to currency pairs, let’s see where the US Dollar index is heading:
The US Dollar index formed a bullish pre-breakout structure, aiming towards the 109.28 double top patterns. A bullish daily close above the 109.30 level would extend the bullish momentum towards the 115.00 level.
EUR/USD passed a corrective week, followed by a strong bearish trend where no sign of a strong bullish reversal was seen. In the weekly candle, the shadow above and below the body represents bulls' and bears' presence in the market, where bears were the ultimate winners.
In that case, any minor bullish correction might increase the possibility of extending the current bearish trend below the 1.0000 level.
This technical analysis represents the daily candlestick chart of EUR/USD, where the highest trading volume from 1.0367 swing high to 0.9900 swing low is at 1.0163. As a result, the selling pressure towards the 1.0000 level came with the volume support, which may increase the bearish momentum this week.
The dynamic 20-day EMA is above the price, where the current price trades within an ascending channel. On the other hand, the Relative Strength Index on the daily timeframe is below the neutral 50% level, aiming for the oversold 30% area.
Based on the weekly EUR/USD price forecast, any bearish pressure with a daily close below the 0.9950 level might extend the momentum towards the 0.9900 level. On the other hand, the extension to the channel might increase the price towards the 1.0163 high volume level.
Like EURUSD, GBP/USD continued pushing lower, while last week was corrective, followed by a strong bearish swing. However, bulls tried to make a swing high at the 1.1899 level but wiped off gains with a massive bearish daily candle last Friday.
As a result, bears seem active in the market, and the coming days might extend the loss for GBP below the 1.1720 key support level.
This technical analysis shows the daily price of GBP/USD, where the recent bearish daily candle came with a strong change in volumes at the 1.1800 level. Moreover, the dynamic 20-day Exponential Moving Average is above the 1.1899 swing high, sloping down. The Relative Strength Index is also down towards the 30.00 level.
Based on the GBP/USD price forecast for 29 August 2022 to 02 September 2022, a bearish daily close below 1.1720 would extend the momentum towards the 1.1490 level. On the other hand, any strong bullish rejection from the 1.1720 level would open another short opportunity from the untested 1.1899 level.
However, breaking above the 1.1900 level might invalidate the current momentum, with a bullish possibility toward the 1.2200 level.
AUD/USD price action is still corrective, despite the massive selling pressure from the strong US dollar during Powell’s speech. After providing a 128 pips gain to bulls, last Friday’s daily candle wiped out all gains by forming a strong bearish engulfing candlestick.
This technical analysis represents how bears dominate the market, from the 0.7008 swing high. The price formed a bearish daily candle below the dynamic 20-day EMA, while the RSI shifted its direction below the 50% level.
The changing factor for AUD/USD bears is to overcome the high volume of 0.6902 level, which is near the weekly closing level. Therefore, investors should find a stable price below the 0.6954 swing low before aiming toward the 0.6683 swing low.
On the other hand, a strong recovery above 0.7008 is needed to consider the buying pressure as valid towards the 0.7136 resistance level.
USD/JPY maintained the buying pressure where last week's false break and rebound from the 135.80 swing level increased the buying possibility for this week. In the weekly chart, multiple bullish exhaustion was seen from the dynamic 20 EMA, which indicates massive buyers' presence in the market.
This technical analysis shows how the price remains stable above the 135.80 swing low, while the dynamic 20-day Exponential Moving Average works as a minor support level. The highest trading volume from 139.40 to 131.72 zone is at the 133.21 level, which is below the current price. The Relative Strength Index is also positive for buyers as it stays above the 50.00 level, aiming toward the 70.00 overbought level.
In the USDJPY price forecast for 29 August 2022 to 02 September 2022, bulls have a higher possibility of winning the battle, where the primary aim is to test the 139.40 swing high. The alternative approach is to find the price below the 135.80 level, which may initiate a consolidation before showing further buying signs.
XAU/USD completed the minor bullish correction by reaching the 1764.94 level, from where a strong bearish pressure came with a daily close.
This technical analysis indicates how bears closed the week with a strong bearish candle on Friday, eliminating the last two days' bullish price action. The dynamic 20 EMA worked as a confluence resistance at the 1764.94 level, while the RSI level remained bearish below the 50% neutral level.
Based on the XAU/USD price forecast, the selling pressure in this instrument is valid as long as bears hold it below the 1764.94 level. In that case, the ultimate target for bears would be towards the 1681.11 level, while the immediate target level is 1710.84.
Bitcoin price formed three ascending parallel channels over the last eight months. All of these patterns showed a bearish breakdown, while the latest breakdown came on 19 August, making a 10% loss from 23,200.00 to 20,800.00 level.
The price became more attractive to bears after breaking below the 20,750.00 equal low. Although the price recovered towards the 21,209.00 Point of Control level, last Friday’s price action during Fed chair Powell's speech eliminated all bullish possibilities.
This technical analysis shows how the price formed a range after the channel breakout that pushed bears to grab the wheel. The dynamic 20 EMA is above the 21,913.13 immediate resistance level, while the next support level is at 17,609.00, which is the ultimate target of the bearish pressure.
On the other hand, a bullish recovery above the 22,000.00 level with a bullish daily close might alter the existing momentum, increasing the possibility of increasing the price towards the 25,240.89 resistance level.
The US Dollar regained momentum against the basket of currencies, which may hint at further selling pressure in EURUSD, GBPUSD, and AUDUSD. However, the recession fear is not over yet, but further indication about the US economy will come from this week’s NFP release.