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Forex Technical Outlook for 25 March 2024 to 29 March 2024

forex technical outlook
author Written by
Rex John Walsh
author Fact checked by
Sangram Mohanta

Last Updated on June 2, 2024 by TOP FOREX BROKERS REVIEW

As indicated by last week's economic indicators, the housing sector continues to provide substantial support for the robust expansion of the U.S. economy. Existing home sales and housing starts both exceeded expectations in February, suggesting substantial expansion. Furthermore, the number of initial unemployment claims has remained relatively low for the entire month of March.

On the other hand, the Bank of Japan (BoJ) formally terminated its unconventional monetary policy position, signifying its initial increase in interest rates since 2007. This action was widely anticipated and thus significant. The decision appears to have been substantially impacted by the results of the wage negotiations that took place in Japan during the spring season.

The Federal Open Market Committee (FOMC) decided to maintain the target range for the federal funds rate and the rate of balance sheet runoff (QT) after its March 20 meeting. Nevertheless, personal projections put forth by FOMC members concerning annual rates, growth, and inflation indicate a slightly more aggressive position.

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Forex Technical Outlook for 25 March 2024 to 29 March 2024

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

  • CB Consumer Confidence on Tuesday
  • AUD CPI y/y on Wednesday
  • FOMC Member Waller Speaks on Thursday
  • CAD GDP m/m on Thursday
  • USD GDP m/m on Thursday
  • US Pending Home Sales m/m on Thursday
  • Core PCE Price Index m/m on Friday

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

EURUSD

Investors have seen a major decline in the EUR/USD throughout the week. However, the major selling pressure came from comments made by Bundesbank President Joachim Nagel. 

Nagel said that the ECB might think about lowering interest rates before the summer break, with a greater chance of this happening in June than in April. "If I would put it into probabilities, definitely something in June has a higher probability than in April," Nagel reportedly said.

According to market estimates, a rate cut of 89 basis points is anticipated; this translates to three or four possible moves of 25 basis points, the first of which is anticipated in June or July. Nagel pointed out that a first cut wouldn't guarantee a second or third. Decisions would be assessed by the ECB at each meeting, taking new information into account when it became available.

Nagel's recent remarks seem more concerned with the chances for progress in Europe than with his native country. He proposed in February that the governing council postpone making any decisions about interest rate cuts until after the release of Q2 wage data.

These comments were made by Nagel at a webcast on "monetary policy challenges and the economic outlook for the Eurozone and Germany," as the economic calendar reported.

eurusd-forex-technical-outlook

The EURUSD bullish continuation failed to offer a long opportunity from the near-term support area. Instead of forming a bullish rejection, the price formed an immediate bearish reversal with a two-bar reversal formation. 

Moreover, a bearish daily close formed below the dynamic 20-day EMA and 100-day SMA, which was a bearish continuation opportunity.

Based on the current price outlook, the downside continuation is potent, targeting the 1.0697 level. However, an immediate bullish reversal with a stable market above the dynamic 20-day EMA could alter the current market outlook.

GBPUSD

The pound sterling (GBP) is still under pressure to decline versus the US dollar, which indicates the general gloomy mood in the market. The GBPUSD pair struggles to find support even if the February Retail Sales data exceeded forecasts. This is mainly because of growing speculation that the Bank of England (BoE) would lower interest rates later this year.

In the UK, the Office for National Statistics (ONS) stated that monthly retail sales were unchanged in January despite a strong 3.6% growth in the previous month, which was revised up from 3.4%. The market had been expecting a 0.3% drop. Sales decreased by 0.5% annually, less than the predicted 0.7% decline.

Retail sales data is an essential indicator of the present trends in consumer spending, which are major drivers of economic activity. Even if retail sales somewhat exceeded projections, they were not enough to offset the general risk aversion that pervaded the worldwide market.

The little deceleration in the Retail Sales fall is insufficient to counteract the effect of increased anticipation that the Bank of England (BoE) will begin cutting interest rates in August.

gbpusd-forex-technical-outlook

In the most recent price, the downside pressure is visible as the ongoing bearish is potent below the 100-day SMA line. Moreover, the RSI moved below the 50.00 line, working as a confluence bearish signal.

Based on this outlook, the downside momentum could extend in this pair towards the 1.2400 level. However, any bullish rebound from the 1.2617 to 1.2600 area could indicate a minor bullish correction.

AUDUSD

The US Dollar (USD) rose in reaction to mixed S&P preliminary Purchasing Managers Index (PMI) data and strong weekly Jobless Claims figures from the US, causing the Australian dollar (AUD) to decrease for the second week in a row on Friday.

The decline in the ASX 200 Index intensified the downward pressure on the Australian dollar. Even if Wall Street performed well—all three major indexes hit all-time highs—the Australian equities market lost money, especially in the consumer and energy industries.

Despite the decline in US Treasury yields, the US Dollar Index (DXY) kept rising. The Federal Reserve (Fed) reiterated its forecast for three interest rate reductions in 2024, which put pressure on the US dollar. Most predict that an easing cycle will begin in June, and the timing of the successive reduction will depend on new data.

AUD/USD-forex-technical-outlook

The prolonged downside pressure took the AUDUSD price below the 100-day Simple Moving AVerage line. However, the price still trades above the trendline support, which could limit the downside pressure at any time.

Based on the ongoing market behavior, a downside continuation, with a daily close below the trendline support, could lower the price toward the 0.6339 support level. However, a rebound is possible as a minor correction from the 0.6500 to 0.6450 area at any time.

USDJPY

The Japanese Yen (JPY) experienced a modest recovery on Friday, following a year-to-date low that could potentially end an eight-day losing streak. However, a significant increase in value continues to elude observers due to the ambiguity surrounding the Bank of Japan's (BoJ) forthcoming policy decisions. However, persistent demand for purchasing US Dollars (USD) ought to assist in alleviating potential negative developments for the USDJPY pair.

As per a BoJ source cited by the Nikkei newspaper, the potential for an early rate rise provides flexibility to consider an additional increase before the year's conclusion. Moreover, according to data recently disclosed on Friday, consumer inflation in Japan remains above the 2% annual target set by the Bank of Japan. 

This is in conjunction with substantial wage increases for Japanese employees, which are anticipated to increase inflation in the future months.

Conversely, the USD appreciates, building on its recovery from a one-week low, bolstered by optimism regarding US economic expansion.

USDJPY-forex-technical-outlook

Following the US Dollar’s strength, the USDJPY price extended the buying pressure and reached the 151.89 resistance level. As the last weekly candle closed below this line, investors should monitor how the price reacts in this area after opening.

Any bullish continuation and immediate bearish pressure could offer a corrective downside pressure towards the 149.00 level. However, consolidation in this area could offer a trend trading opportunity, targeting the 153.00 level.

XAUUSD

Last week, the price of gold (XAUUSD) declined after making a new high, approaching 2,160 levels. As the US Dollar gains strength, the precious metal is subject to substantial selling pressure. This is primarily due to the optimistic economic outlook for the United States, which was bolstered by strong Existing Home Sales data.

Typically, gold, denominated in US dollars, undergoes a reduction in liquidity when the USD gains strength. The optimism regarding the United States economy has increased after the Federal Reserve's upward adjustment of growth projections for the year 2024. The Fed has revised its growth forecast for the US Gross Domestic Product (GDP) from 1.4% in December to 2.1%.

In the interim, 10-year US Treasury yields declined to 4.24% on Wednesday as the Federal Reserve reaffirmed its anticipation of three interest rate cutbacks this year. Federal Reserve officials uphold their December outlook in defiance of persistent inflationary pressures among producers and consumers in February. As for further guidance, US bond yields remain within the trading range of Thursday, pending the arrival of new catalysts.

XAUUSD-forex-technical-outlook

In the daily chart of XAUUSD, the recent price formed a bullish exhaustion at the top, suggesting a potential downside pressure in the coming days.

Investors should closely monitor how the price trades at the 2146.47 static support level as a bearish daily close below this line could be a high probable short opportunity, targeting the 1980.00 level.

BTCUSD

As a result of the Wednesday FOMC meeting boosting Bitcoin's price, Wall Street is increasingly looking forward to the inaugural Bitcoin Investor Day, which is scheduled to occur in New York City. The event, which is organized by the renowned research firm Reflexivity Research and will be moderated by Anthony Pompliano, is billed as an annual gathering for affluent Wall Street investors interested in investigating Bitcoin.

Institutional investors, capital allocators, and entrepreneurs will attend to engage in enlightening discussions on the future of Bitcoin and facilitate networking opportunities. The occasion possesses the capacity to invigorate the valuation of Bitcoin, propelled by novel perspectives acquired by investors and augmented inflow of capital from institutions.

Certain investors may partake in speculative trading before, during, or after Bitcoin Investor Day, resulting in brief price oscillations in either direction. Conversely, if the occurrence cultivates a favorable outlook and hopefulness regarding the future of Bitcoin, it might incite increased purchasing power and drive its valuation higher.

Notwithstanding these possibilities, the declining inflows into exchange-traded funds (ETFs) that hold spot BTC hinder Bitcoin's ascent. Eric Balchunas, an ETF analyst at Bloomberg Intelligence, reports that GBTC, Grayscale's spot BTC ETF, has experienced a second surge of outflows totaling up to $1.4 billion this week.

BTCUSD-forex-technical-outlook

BTCUSD formed a possible head and shoulders formation, where the most recent price trades were below the 20-day EMA line. In that case, a bearish daily candle below the 60737.30 static line could be a potentially bearish signal, validating the Head and Shoulders breakout.

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