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Forex Technical Outlook from 08 July 2024 to 12 July 2024

Forex Technical Outlook from 08 July 2024 to 12 July 2024
author Written by
Rex John Walsh
author Fact checked by
Sangram Mohanta

Last Updated on July 7, 2024 by TOP FOREX BROKERS REVIEW

The flow of economic data remained uninterrupted, even though many individuals enjoyed a holiday-shortened week. In June, nonfarm payrolls increased by 206,000; however, the headline increase was somewhat mitigated by the downward revisions for the previous two months. Furthermore, the unemployment rate increased by a tenth of a point to 4.1% in June, the greatest level since late 2021.

Japan's Q2 Tankan survey maintained an optimistic outlook for economic recovery. The index for major manufacturers increased by two points to +13, while the index for large non-manufacturers decreased by one point to +33. Japanese enterprises' capital spending strategies also improved.

Nevertheless, the economic data still needs consistency, as evidenced by the substantial decline in Q1 GDP. In light of this context, we predict that the Bank of Japan will postpone any additional policy rate increases until October.

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Forex Technical Outlook from 08 July 2024 to 12 July 2024

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

  • Fed Chair Powell Testifies on Tuesday & Wednesday
  • NZD Official Cash Rate & Rate Statement on Tuesday
  • US CPI and Core CPI on Thursday
  • US PPI and Core PPI on Friday

EURUSD

EURUSD maintained its gains above the 1.0800 level, as the US Nonfarm Payrolls (NFP) report indicated a predictable decline in June Average Hourly Earnings. Wage growth declined to 3.9% annually, as anticipated, from 4.1% in May. This alleviated concerns regarding the persistence of price pressures.

Employers hired 206K individuals in June, surpassing the anticipated 190K but falling short of the previous 272K. The Unemployment Rate increased to 4.1%, surpassing the anticipated and previous rate of 4.0%.

The US Dollar (DXY) has been experiencing volatility due to increasing rumors that the Federal Reserve will commence the process of reducing interest rates at its September meeting. The US Dollar Index (DXY) has extended its losing streak to seven trading sessions, reaching a new three-week low near 105.00.

Fed Chair Jerome Powell's confidence in the central bank's progress on inflation, a weakening labour market, and a contraction in the Services PMI have all contributed to a substantial increase in traders' wagers on a September rate cut.

Furthermore, the Services PMI plummeted to its lowest level in four years, suggesting a contraction in the sector, and the June ADP Employment Change report revealed an unexpected decline in private sector hiring.

EURUSD

The EURUSD price continues its bullish trend after a channel breakout. Moreover, steady buying pressure is seen in the weekly chart, showing a trend continuation signal.

Based on this structure, a bullish pressure is likely to extend and find a resistance from the 1.1050 level.

GBPUSD

The Pound Sterling (GBP) demonstrated robust performance against major currencies, except the Japanese Yen (JPY). Despite the Conservative Party, which has been in power since 2010, losing to the Labour Party, led by Keir Starmer, in the parliamentary elections on Thursday, this strength remains.

Investors believe the Labour Party's absolute majority has substantially enhanced the pound sterling's allure. In contrast to the circumstances during the Conservative era, financial markets are generally advantageous when a political party achieves an uncontested majority.

Investors anticipate that the Bank of England (BoE) will commence to reduce interest rates at the August meeting in terms of monetary policy. The monthly Gross Domestic Product (GDP) and factory data for May, scheduled for release on Thursday, July 11, will be the next significant catalyst for the Pound Sterling.

GBPUSD

A bullish continuation is highly possible in the GBPUSD pair as the current price already shows bullish pre-breakout momentum. The most recent daily candle closed in line with the 1.2815 resistance level, from which buying pressure might come.

The buying pressure from the dynamic 20-day EMA and 100-day SMA could extend the momentum to the 1.3000 level in the coming days.

AUDUSD

Last Friday, the Australian Dollar (AUD) held its ground against the US dollar, which dropped following the release of less-than-expected US Nonfarm Payrolls (NFP) data. With a value of 0.6740, the AUD is at its highest point since early January.

Rate cuts by the Reserve Bank of Australia (RBA), among the final G10 central banks to do so, should keep the Australian dollar strong in these circumstances. The RBA continues to be hawkish due to persistent inflation, despite signs that the Australian economy is slowing down. Furthermore, strong retail sales data released earlier this week suggest a good economic outlook.

AUDUSD

A bullish rectangle breakout is present, taking the price above the 0.6714 resistance level. It is a sign of an active buying pressure, which may extend the upward pressure at the 0.6839 resistance level. 

However, the gap between the current price and the dynamic 100-day SMA has extended, which might lower the price as a mean reversion. The buying pressure would be active as long as the price trades above the 0.6650 level.

USDJPY

The USDJPY pair continues to retrace, reaching a level near 161.80. The pair is experiencing pressure as a result of one-sided, excessive movements, which are being driven by concerns regarding Japanese intervention in the forex market. 

In response to these developments, the Japanese Yen has experienced a substantial decline in value, and the US Dollar (USD) has experienced a severe sell-off. There is widespread speculation that the Federal Reserve (Fed) will commence the process of reducing interest rates at the September meeting.

Nevertheless, a significant decrease in overall household expenditures in May has called into question the BoJ's rate-hike trajectory. The economic data revealed an unexpected decline of 1.8%, starkly contrasting the economists' predictions that household purchasing power would increase at a slowing rate of 0.1% from the previous release of 0.5%.

USDJPY

In the USDJPY, price bears found relief from the post-NFP sentiment, finding support at the 160.22 event level. However, dynamic levels are bullish- below the current price, with no sign of exhaustion at the top.

In that case, the bullish continuation is highly possible, targeting the 164.00 psychological level. 

XAUUSD

Gold (XAU/USD) increased in value on Friday, extending its streak of positive days. Investors are becoming more optimistic that the Federal Reserve (Fed) will reduce interest rates earlier than anticipated. The softening of the US Dollar (USD) also encourages the price of Gold, as it is primarily traded in dollars.

The rally in Gold is further bolstered by the issuance of the US Nonfarm Payrolls (NFP) report on Friday. The unemployment rate increased from 4.0% to 4.1%, marking its greatest point since the conclusion of the COVID-19 pandemic in November 2021. This unexpected outcome suggests that the labour market is contracting, which heightens the probability that the Federal Reserve will reduce interest rates in order to stimulate employment.

Other information from the NFP report was less unfavourable: According to the June Headline Nonfarm Payrolls, 206K new employees entered the workforce, surpassing the anticipated 190K but falling short of the previous 272K.

XAUUSD

A bullish pennant breakout is in place, creating a strong buying pressure above the dynamic 20 day Exponential Moving Average level. Moreover, the RSI is yet to reach the 70.00 level, creating a bullish continuation opportunity.

In this structure, the main aim of the price is to test the 2400.00 psychological line in the coming days. However, a failure to hold the price above the 2320.00 psychological line could lower the price to the 2300.00 area.

BTCUSD

Within the last 24 hours, Bitcoin underwent a substantial liquidation event, resulting in the loss of nearly $226 million in derivatives positions. This correction in the largest cryptocurrency by market capitalization has also decreased altcoins and various token categories.

According to on-chain data, the current liquidation is the second-largest event in the annals of Bitcoin, with the FTX collapse in November 2022 being the largest. The recent correction is likely the result of market-moving factors, including the German government's Bitcoin transfers and the repayments to creditors by Mt.Gox that are currently scheduled for July.

The market capitalization of base meme coins decreased by 25.2% in the last 24 hours. CoinGecko data indicates that the total market capitalization was $1.476 trillion last Friday.

BTCUSD

In the BTCUSD daily chart, extensive selling pressure is visible, supported by the bearish crossover in dynamic lines. As the most recent price moved below the 56580.24 level, buying pressure might come from a bearish exhaustion. However, the next support level is at 50560.65 level, which might be retested in case of a failure to form an immediate buying pressure.


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