Forex Market Outlook: 16 August 2022

Updated August 16, 2022

The dollar gained against other major currencies in hopes that the Federal Reserve will continue its hike rates. The Fed minutes coming out on Wednesday will provide more clarity to the pace of rate hikes in the future.

The Canadian dollar retraces its decline against the dollar and looks on track to test the monthly high. Headline inflation is expected to slow to 7.6% from 8.1% YoY. We may see the BoC implement smaller rate hikes over the coming months as inflation in Canada seems to have peaked.

China reported weaker retail sales and industrial production data for July and unexpectedly lowered its 1yr medium term lending facility by 10 basis points. Copper and iron ore prices also saw a dip which weighed heavily on commodity-sensitive AUD. The RBA will also release its August policy minutes today, which will provide additional insights to AUD’s direction in the near future.

Trade ideas that played out last Thursday: 11 August 2022

USD H1: Bearish outlook seen, further downside below 1.2230

On the H1 time frame, prices are facing bearish pressure from the resistance zone at 1.2230, in line with the 38.2% Fibonacci retracement and a pullback to this resistance zone presents an opportunity to play the drop to the support target at 1.2120. Stochastics is testing resistance at 95.66 as well where we could see further downside, in line with prices.

Before:

Coloured candles represent our projection
Source: TradingView. https://www.tradingview.com/chart/GBPUSD/B9CtyVWn-GBPUSD-H1-Bearish-outlook-seen-further-downside-below-1-22

After:

USDCAD H4: Bearish outlook seen, further downside below 1.2840

On the H4 time frame, prices broke its previous ascending trend line where we could see further downside risks. A pullback to the resistance zone at 1.2840, in line with the support-turned-resistance area and Fibonacci confluences could see a reversal below this zone to the support zone at 1.2680. Prices are holding below the 50 EMA as well, supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDCAD/7WjpQCv1-USDCAD-H4-Bearish-outlook-seen-further-downside-below-1-2840/

UUSD H4: Bearish outlook seen, further downside below 1802.80

On the H4 time frame, prices are facing bearish pressure from the resistance zone at 1802.80 in line with the Fibonacci confluence levels where we could see further downside below this zone. A pullback to the resistance zone at 1802.80 presents an opportunity to play the drop to the support target at 1759.50. Stochastics is testing resistance at 95.30 as well where we could see more downside, in line with prices.

Source: TradingView. https://www.tradingview.com/chart/USDCAD/7WjpQCv1-USDCAD-H4-Bearish-outlook-seen-further-downside-below-1-2840/

Today’s trade ideas: 16 August 2022

EURUSD H1: Bearish outlook seen, awaiting retracement to the next resistance level at 1.0263

On the H1 timeframe, price have rejected the 1.0350 level with a double top formation and has headed down to the 1.011 support level. A retracement back to 1.02135 level coincides with the 0.618 Fibonacci retracement level.

Coloured candles represent our projection

NZDUSD H1: Bullish outlook seen, waiting to bounce from the channel support at 0.6312

On the H1 timeframe, prices have formed an upward trend and retrace earlier this week to test the lower bounds of the channel. A bounce from the 0.786 retracement level at 0.6312 will be a good opportunity for the continuation of this upward trend. This may also coincide with the 50bps rate hike by RBNZ on Wednesday.

Coloured candles represent our projection

Source: TradingView.  https://www.tradingview.com/chart/NZDUSD/wt0yX3vn-NZDUSD-H1-Bullish-outlook-seen-waiting-to-bounce-from-the-chan/

CADJPY D1: Bullish outlook seen, waiting for retracement to the 0.786 Fibonacci level at 100.272

On the D1 timeframe, a strong bullish trend can be seen. Prices have broken out of the previous ascending channel at around 97.05, and the upper bound has served as a resistance turned support level on 2 occasions. A good opportunity to ride the trend at the 0.786 Fibonacci retracement level for the continuation to the upside.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/CADJPY/D3ijFSJS-CADJPY-D1-Bullish-outlook-seen-waiting-for-retracement-to-the/

Past performance is no indication of future performance. This report is provided by Zeta Labs, a specialized Forex Fintech Consultant and Technical Advisor who provides white-label solutions for FX Market Analysis, trading insights and education webinars. The team has a wealth of industry experience, with our analyst being part of the team recognised by The Technical Analyst Awards as Finalist for the Best FX Research for 4 consecutive years (2019, 2020, 2021, 2022). 

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