The global financial market has seen a directional bias from the Hawkish FOMC and the Non-Farm Payroll last week. There was an 850,000-job growth in the US, but the unemployment rate failed to catch investors’ attention positively.
As a result, the US Dollar started doing a correction against other major currencies, and the leading investors will focus on how the new delta virus is affecting the Eurozone economy.
Forex Technical Outlook for 5 July 2021 to 9 July 2021
In this week, there are multiple economic releases from the Bank of Canada, Bank of England and RBA where the unemployment rate from BoC and RBA rate statement will be significant price drivers. So, considering the overall market context, let’s see what might happen in the coming days:
EURUSD moved down with an impulsive bearish pressure as soon as the Fed surprised the market with a Hawkish tone, eliminating the possibility of the negative impact from the possible inflation. As a result, the price moved down from 1.2122 to 1.18610 level without any correction. Later on, the price moved higher but rejected from the 1.1964 resistance level with a bearish pinbar.
Last week, the price showed a bearish continuation pattern, breaking below the near term low of 1.1846 but failed to hold the momentum. However, last Friday, the price closed with a bullish daily candle following the weaker US unemployment report. Moreover, the bullish daily candle with a potential hidden divergence with MACD signifies that the price has a higher possibility of moving higher in the coming days.
Moreover, the recent bearish pressure created a gap between dynamic 20 EMA and the price on the daily chart that may create the possibility of bullish correction as a mean reversion. Therefore, as long as the price is holding its position above the 1.1804 swings low, it may correct higher towards 1.1964 level in the coming days. However, breaking below the 1.800 level with a bearish daily close may lower the price towards the 1.1700 level.
Like EURUSD, GBPUSD moved lower as soon as the Fed showed a hawkish tone with an indication of a rate hike. However, the price failed to hold the bearish momentum and moved above the 1.3800 key level with a daily close. Therefore, as long as the price is trading above the 1.3800 level, it has a higher possibility of a bullish correction in the coming days.
In the above image, we can see the daily chart of GBPUSD, where the price showed a bullish daily close above 1.3800 level with a possible hidden divergence with MACD. However, the overall price structure is within the range between 1.400 to 1.3680, where a stable price above 1.3800 is a sign of extending the range.
However, investors should keep a close eye on how the infection rate is changing in the UK. An increased infection rate may take the GPBUSD higher towards dynamic 20 EMA as mean reversion. On the other hand, any strong bearish break down below 1.3800 level with a daily close may extend the bearish pressure towards the lowest point of the correction at 1.3680 level.
AUDUSD remained corrective during the last week, where the price failed to hold the bearish momentum below the 0.7477 support level. However, investors should focus on how the RBA reacts to the rate statement where the 0.7580 will be a significant price changer.
After rejecting the 0.7477 level, the price is nearing the 0.7580 static resistance and dynamic 20 EMA. Therefore, a hawkish RBA with a bullish daily close above 0.7580 may extend the bullish pressure towards the 0.7700 area.
On the other hand, any bullish rejection from the 0.7580 with a bearish daily close may take the price lower towards the 0.7334 area.
After a prolonged bearish pressure, USDCAD successfully made a bottom at the 1.200 key support level. Later on, the price moved higher with an impulsive bullish force towards the 1.2400 event-level but failed to hold the bullish momentum above it.
This week, the key event is the CAD unemployment rate, where the current projection is a better than expected result from -68.0K to 40.0K. Therefore, investors may experience volatility in the price, but until Friday, the price is expected to extend the current volatility. However, any bearish rejection from the dynamic 20 EMA may provide a primary indication of a bullish breakout above the 1.2400 level.
USDJPY remained within a volatile bullish trend where the price successfully made a new yearly low above 111.00 key resistance level. However, the current price structure is not supportive of bullish as the price failed to show an extensive buying pressure above the 111.00 level.
In the above image, we can see the daily chart of USDJPY where the price moves up within a parallel channel where a bearish close of last Friday is a sign that buyers are losing their momentum.
In that case, traders should find the price below the 110.47 intraday event level for considering the upcoming price direction as bearish. On the other hand, as long as buyers hold the price above 111.00 psychological level, the bullish outlook prevails with the target of 112.20 resistance level.
USDCHF showed a massive bullish pressure as soon as bears failed to hold the price below the 0.8929 level. However, the recent bullish pressure took the price higher with an impulsive bullish pressure but was unable to breach the 0.9229 event level.
In the above image, we can see that the daily chart of USDCHF where the price became corrective and a bearish daily close appeared below the 0.9229 event level. Therefore, the price has a higher possibility of correcting lower this week towards 0.9045 level. However, any rejection from dynamic 20 EMA with a bullish daily cable above 0.9229 level may take the price higher above 0.9373 level.
Overall, this week is expected to remain eventful, with a possibility of a decent price movement in most of the major currency pairs. However, investors should closely monitor the delta variant in the Eurozone and the UK. Any increase in infection rates might make the price volatile, where strong trade management would decrease the possibility of making losses.
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