In April, there was a 16.6% decline in the US new home sales with a further 3.9% drop in pending home sales, indicating that the housing market is cooling down from the rising interest rate. On the other hand, the personal income and spending remained higher besides the hot inflation. The headline PCE deflator was up by 6.3% with the core value up by 4.9%.
Among other economies, May PMIs provided insight into the Eurozone, indicating a modest loss of momentum. On the other hand, the UK PMI survey noted that the economy might face a further slowdown in the coming days.
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Forex Technical Outlook for 30 May 2022 to 03 June 2022
The week will start with the BoC interest rate decision where the current projection is to raise the interest rate by 50 bps. Moreover, the Non-farm payroll will provide the outlook of the US economy on Friday where the current analysts’ expectation is to decrease the value from 428K to 325K.
In the US Dollar index daily chart, the price moved below the dynamic 20 EMA and 102.50 static levels, which is the primary indication of the upcoming selling pressure towards the 100.48 level. On the other hand, bulls should show an immediate rebound with a daily close above the dynamic 20 EMA before testing the 103.90 resistance level.
EUR/USD passed two consecutive bullish weeks, although the broader market context is still bearish. The price tested the 1.0345 monthly support from where a buying pressure came, pushing the daily candle above the dynamic 20 EMA. However, the price still trades within the bearish channel where the selling possibility awaits a rejection from the 1.0850 to 1.0936 supply zone. On the other hand, the current price trades above the dynamic 20 EMA and 1.0629 static support level that may influence bulls to reach the 1.0936 supply level.
The above technical analysis shows how the price stalls above the 1.0629 support level, indicating less interest by sellers. Moreover, the RSI level moved above the neutral 50 levels for the first time in the last two months, indicating a reversal momentum to 850 pips downside movement from 1.1187 to 1.0346 level. Meanwhile, the dynamic 20 EMA is below the price, providing confluence support at the 1.0629 static level.
In the coming days, the 1.0629 level would be a significant price director for the EURUSD pair, from where any bullish rejection would raise the price towards the 1.0936 supply level. On the other hand, the current price still trades within the bearish channel, where the failure to hold the price above the dynamic 20 EMA would resume the bearish pressure toward the 1.0336 level.
GBP/USD continued the bullish recovery by reaching the 1.2641 static support level with a bullish pre-breakout structure. Before that, the price moved above the dynamic 20 EMA and formed multiple bullish rejection candlesticks. On the weekly chart, the bullish recovery from the 1.2152 level was boosted by consecutive two bullish weekly closes with a V-shape recovery in the RSI.
This technical analysis shows how the price trades at the 1.2641 resistance level with a corrective momentum. The RSI rebounded higher from the oversold 30 levels in the indicator window and moved above the neutral 50 areas. Meanwhile, the current price trades above the dynamic 20 EMA while the existing trend is still bearish.
Based on this structure, traders should closely monitor the price action between the 1.2650 to 1.2520 level, where any further bullish rejection and daily candle above the 1.2650 would increase the possibility of testing the 1.2983 to 1.2830 imbalance area. On the other hand, another trading approach is to wait for the violation of the dynamic 20 EMA, where a bearish daily close below the 1.2490 level would resume the bearish trend towards the 1.2200 area.
After a long selling pressure from April high to May low, AUD/USD finally showed the bearish channel breakout in the higher timeframe chart. The weekly chart showed the sell-side liquidity grab below the 0.7054 level from where a bullish two-bar rejection appeared.
This technical analysis shows that the price consolidated above the 0.7054 support level before making a new swing high. The RSI reversed from the 30 level in the indicator window and moved above the neutral 50 areas. The dynamic 20 EMA is also below the price, providing minor support.
Therefore, based on the current price action, the upcoming price may remain bullish, followed by the bearish channel breakout. In that case, the bullish sentiment may extend towards the 0.7263 level as long as it trades above the dynamic 20 EMA. On the other hand, a strong rebound with a strong sell candle below the 0.7000 would increase the volatility in the chart.
The long bullish trend is still active, although the price remained below the dynamic 20 EMA for more than seven trading days. After showing a bearish double top formation and neckline breakout, USD/JPY bears could not extend the selling pressure with an impulsive pressure. Instead, the price remained sideways within the bearish channel, where a bullish channel breakout would resume the current trend.
The above technical analysis indicates a corrective pressure in the USDJPY daily chart where the immediate resistance is dynamic 20 EMA. Moreover, the RSI remains steady below the 50 level before going sideways, where the next target is the oversold 30 area.
Based on the daily context, any bearish rejection from the channel resistance would be a bearish opportunity in this pair, where the main aim is to test the 124.75 level. On the other hand, the breakout above the channel resistance with a bullish daily candle above the dynamic 20 EMA would be the bullish signal where the primary price target would be at the 131.27 level.
After the bearish flag breakout, XAU/USD moved more than 270 pips higher from last week’s closing price. However, the price faced a barrier from the dynamic resistance and remained sideways.
This technical analysis shows how the RSI rejected the 50 level before moving sideways, indicating that bulls are still active in the market with the possibility of extending the current bullish momentum.
Based on the current price action, investors should monitor how the daily price trades at the dynamic 20 EMA area, where a bullish daily candle above the 1866.00 level would raise the price towards the 1909.54 level. On the other hand, the bullish sentiment may regain momentum until it breaks below the 1821.97 support level, which is the primary barrier for sellers.
On 6 May 2022, BTC/USD moved down from the bearish flag pattern from where a 32% price drop appeared. After the selling pressure from 69,000 all-time high level, the flag breakout pushed bears to extend the momentum in recent days. Moreover, there is a symmetrical triangle formation after the flag breakout, where the triangle breakout would be an alarming sign for bulls.
The bearish sentiment in the BTCUSD price was supported by the 38% slump in new active addresses, indicating that investors are less interested in buying BTC at the current price level. On the other hand, the number of BTC held on exchanges moved higher to 1.94 million from 1.89 million, indicating that the 2.6% increase in supply would be a sell-side threat for the instrument.
On the other hand, there is a lack of BTC accumulation from whale investors where the 14 whale wallets offloaded their investment in recent days. It is a sign that investors are booking profits hoping to further investment opportunities from the discounted price.
This technical analysis shows how the price trades within the symmetrical triangle, where any bearish daily candle below the triangle support would be an alarming sign for bulls. In that case, the current selling pressure may extend towards the 22,000.00 level. Moreover, the dynamic 20 EMA is above the price and provides a further barrier for bulls. As long as the price trades below the dynamic 20 EMA, the existing selling momentum is valid.
Overall, the Non-farm payroll would be the most awaited event for this week, which will appear on Friday. Before that, a corrective momentum against the US dollar is expected that will push EURUSD, GBPUSD, and AUDUSD higher.