Forex Market Outlook: 25 August 2022

Updated August 25, 2022

The most hawkish Federal Reserve statement highlighting the need for more aggressive rate hikes to manage inflation trumped disappointing US economic statistics, and the dollar index pared recent losses to trade at around 108.5 on Wednesday, hovering near its 20 years high. Neel Kashkari, president of the Minneapolis Fed, expressed concern over underestimating the strength of price pressures and stated that if inflation persists, the central bank will need to be more aggressive for a longer period. Investors are also keeping a close watch on Fed Chair Jerome Powell’s remarks at the annual Jackson Hole conference later this week for more insights on the Fed tightening cycle going forward, with markets weighing between a 50bps or a 75bps rate hike.

On Thursday, WTI crude prices pared recent gains and rallied to reach around $95 a barrel, buoyed by tightening supply concerns which outweighed demand concerns due to the global economic downturn. Saudi Arabia had earlier this week raised the possibility of output reductions by OPEC+ in response to the market uncertainties. For the revival of the 2015 nuclear agreement, Iran said it is evaluating the US reaction to the EU’s “final” language. This could result in a spike in oil shipments from the Persian Gulf producer which could ease price pressures.

Trade ideas that played out on Tuesday: 23 August 2022

USDCHF H1: Bearish outlook seen, further downside below 0.9690

On the H1 time frame, prices are approaching the resistance zone at 0.9690 which lines up with the 61.8% Fibonacci retracement level. We could see a reversal below the 0.9690 resistance zone to our support zone at 0.9600 which is also the graphical support zone and 23.6% Fibonacci retracement. Stochastics is testing resistance at 98.11 as well with a bearish divergence seen as highlighted in red, supporting the bearish bias.

Before:

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDCHF/6D9TppbI-USDCHF-H1-Bearish-outlook-seen-further-downside-below-0-9690/

After:

Today’s trade ideas: 25 August 2022

USDJPY H4: Bearish outlook seen, further downside below 137.50

On the H4 time frame, prices are facing bearish pressure from the resistance zone at 137.50 which lines up with the 78.6% Fibonacci retracement level. We could see a reversal below the 137.50 resistance zone to our support zone at 135.50 which is also the graphical support zone and 38.2% Fibonacci retracement. Stochastics is testing resistance as well as supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDJPY/qm3CqbEO-USDJPY-H4-Bearish-outlook-seen-further-downside-below-137-50/

EURUSD H1: Bullish outlook seen, further upside above 1.0020

On the H1 time frame prices are approaching resistance at 1.0020 where a break and close above this zone could act as support and provide the bullish acceleration to the next resistance zone at 1.0120, which coincides with the 50% Fibonacci retracement. Stochastic is facing bullish pressure from its support as well with more upside in line with prices.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/EURUSD/xUmS2DJz-EURUSD-H1-Bullish-outlook-seen-further-upside-above-1-0020/

USDCHF H4: Bearish outlook seen, further downside below 0.9680

On the H4 time frame, prices are facing bearish pressure from the resistance zone at 0.9680, in line with the 61.8% Fibonacci retracement and graphical support-turned-resistance zone. We could see further downside below this zone to the support zone at 0.9550. Stochastic is testing resistance at 95.37 as well supporting the bearish bias.

Coloured candles represent our projection

Source: TradingView. https://www.tradingview.com/chart/USDCHF/eSvGzR6C-USDCHF-H4-Bearish-outlook-seen-further-downside-below-0-9680/

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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