Forex Market Outlook: 18 August 2022

Updated August 18, 2022

The Dollar hovered around the 106.5 level after the FOMC meeting minutes showed that the Fed remain committed to bringing inflation back to its 2% target and would rely on data to determine if price pressures eased, before scaling back on its hawkish stance. Retail Sales announced were at 0%, with more consumers spending carefully due to the high and rising inflation. Having recovered from the softer-than-expected US inflation numbers last week, investors continue to wait for hints about the upcoming rate hikes in the US. Policymakers have refrained from indicating specifics on the extent of the upcoming rate hike in September.

The Australian dollar weakened against the greenback to a weekly low following the meeting minutes released by the RBA. RBA suggested that its approach to inflation will continue to be adjusted but markets anticipate another 50-basis point rate hike in the coming month before the relaxation of the monetary policy, in view of coming Australia’s Employment report.

The Canadian dollar strengthened against the dollar, buoyed by the dollar weakness, before retreating to its 0.775 level. Canadian annual inflation rate dropped to 7.6%, lower than the 8.1% peak in June, signalling a slowdown. CPI data was also up 0.1% in comparison to June’s – 0.7%. However, the cost of living and prices are expected to stay high, and anticipations of further interest rate hikes at the 7th of September meeting still remain. Elsewhere, RBNZ hiked its official cash rate by 50 basis points to 3% on Wednesday to curb inflation.

Trade ideas that played out last week: 11 August 2022

XAUUSD 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.

Before:

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/XAUUSD/9OaNPj3d-XAUUSD-H4-Bearish-outlook-seen-further-downside-below-1802-80/

After:

Today’s trade ideas: 18 August 2022

USDJPY H4: Bearish outlook seen, further downside below 136.00

On the H4 time frame, prices are approaching the resistance zone at 136.00 which lines up with the Fibonacci confluence levels. We could see a reversal below the 136.00 resistance zone to our support zone at 131.80 which is also the graphical support zone. Failure to hold above the resistance zone at 136.00 could see prices push higher to the next resistance zone at 137.50. Stochastics is approaching resistance at 98.87 as well, supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDJPY/e7UxAAWT-USDJPY-H4-Bearish-outlook-seen-further-downside-below-136-00/

GBPJPY H4: Bearish outlook seen, further downside below 164.50

On the H4 time frame, prices are in a descending channel and a pullback to the resistance zone at 164.50, in line with the 78.6% Fibonacci retracement and 100% Fibonacci extension presents an opportunity to play the drop to the next support zone at 159.50. Stochastic is facing bearish pressure from the resistance at 97.37 as well where we could see a reversal below this level, in line with prices.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/GBPJPY/EuHvGC9H-GBPJPY-H4-Bearish-outlook-seen-further-downside-below-164-50/

AUDUSD H4: Bearish outlook seen, further downside below 0.7000

On the H4 time frame, a pullback to the resistance zone at 0.7000 which coincides with the Fibonacci confluence levels could see a reversal below this zone to the support zone at 0.6860. Failure to hold below the resistance zone at 0.7000 could see prices push higher to the next resistance zone at 0.7080. 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/AUDUSD/1a5m2RkZ-AUDUSD-H4-Bearish-outlook-seen-further-downside-below-0-7000/

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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