AUD/USD Weekly Forecast (21st February 2022 – 25th February 2022)

Fundamental view:

The Australian dollar advanced against the US dollar for a third consecutive week. Aussie was favored by the rising gold prices amid the weak US dollar due to dovish Fed. However, The Russia – Ukraine saga soured the market sentiment prompting the traders towards the safe haven asset – Gold. Russia deployed troops to the region, and Western nations feared an invasion. Moscow wants Ukraine to be permanently barred from joining the North Atlantic Treaty Organization  (NATO) and want to cease all military activity in Eastern Europe. The West has aligned behind Kyiv, and at some point, Russia announced it would pull back troops, although in reality, it has done the opposite.  Risk off sentiment intensified on the US’s warnings over a potential Russian incursion of Ukraine.

The FOMC meeting minutes was released on Wednesday. Inflation was mentioned 73 times in the text, indeed a record , we do not know how many of the more than 70 people present spoke. Policymakers supported a significant reduction in the balance sheet given its “high level of Federal Reserve securities holdings.”  No indication was given for the timing or size of the expected reduction or whether it might be a passive roll-off or active sales. And no clue was provided to the question,  will the March rate cut be 0.25% or 0.5%.  On the other hand, Minutes from the Reserve Bank of Australia showed that policymakers are willing to be patient on inflation. The RBA stated that wages continue to lag and do not expect them to reach the desired levels until 2024. Hence, a rate hike will have to wait until then.

In this week, US PPI monthly report on 15th February and Australia Employment Change on 17th February favored bearish trend whereas US EIA Crude Oil Stocks Change and FOMC meeting on 16th February, US initial jobless claims on 17Th February favored bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Fed Governor Bowman Speech at Feb 21, RBA Assistant Governor Kent Speech, US CB Consumer Confidence Index at Feb 22, Australia Wage Price Index quarterly report at Feb 23, US GDP quarterly report, Initial Jobless Claims, EIA Crude Oil Stocks Change at Feb 24, US Core Durable Goods Orders monthly report and Michigan Consumer Sentiment at Feb 25.  

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.29% lower than the previous week. Maintaining high at 0.7227 and low at 0.7085 showed a movement of 142 pips.

In the upcoming week we expect AUD/USD to show a bullish trend.  The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 0.7238 may open a clean path towards 0.7304 and may take a way up to 0.7380. Should 0.7096 prove to be unreliable support, the AUDUSD may sink downwards 0.7020 and 0.6954 respectively. In H4 chart cup and handle pattern formation favors prospects of a bullish trend. Also to be noted Bullish harami formation exerts the expectation of uptrend for the pair.

Preference
Buy: 0.7175 target at 0.7302 and stop loss at 0.7091

 

Alternate Scenario
Sell: 0.7091 target at 0.6955 and stop loss at 0.7175

USD/JPY Weekly Forecast (21st February 2022 – 25th February 2022)

Fundamental view:

Japanese yen edged higher against the US dollar during the trading course of the week. Russian intentions over Ukraine and the headlines regarding the military and diplomatic situation and the dovish Fed were the key catalysts for the USD/JPY movement. Ukrainian political and military tension weakened the USD.JPY as the safe-haven flows in the pair favor the yen over the dollar. However, Traders chose US dollar against other major currencies and the safety purchases of US Treasuries lower yields weakened the greenback. The Federal Reserve released Minutes of the latest FOMC meeting on Wednesday, and the document portrayed that the policymakers are ready to rate hike and preparing for plans to reduce the balance sheet. However, Market expectation was not meet as voting members maintained a measured approach to monetary policy tightening.

On the other hand, Japanese fourth quarter GDP (QoQ) at 1.3% was stronger than the -0.4% Annualized GDP was 5.4% stronger than the -1.5 % expectation and previous 2.7% decrease.

In this week, US PPI monthly report on 15th February and Japan Tertiary Industry Activity Index monthly report on 16th February favored bullish trend whereas Japan GDP quarterly report on 15th February and US EIA Crude Oil Stocks Change on 16th February favored bearish trend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan Markit Manufacturing PMI, Fed Governor Bowman Speech at Feb 21, US CB Consumer Confidence Index at Feb 22, Tokyo CPI yearly report, US GDP quarterly report, Initial Jobless Claims, EIA Crude Oil Stocks Change at Feb 24, US Core Durable Goods Orders monthly report and Michigan Consumer Sentiment at Feb 25.  

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.40% lower than the previous week. Maintaining high at 115.87 and low at 114.79 showed a movement of 108 pips.

In the upcoming week we expect USD/JPY to show a bullish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. A solid breakout above 115.62 may open a clean path towards 116.29 and may take a way up to 116.70. Should 114.54 prove to be unreliable support, the USDJPY may sink downwards 114.13 and 113.46 respectively. In H4 chart, if breakout of the falling wedge is to the upside then bullish expectation is favored. Also to be noted hammer formation exerts the expectation of uptrend for the pair.

Preference
Buy: 115.25 target at 116.28 and stop loss at 114.49

 

Alternate Scenario
Sell: 114.49 target at 113.47 and stop loss at 115.25

GBP/USD Weekly Forecast (21st February 2022 – 25th February 2022)

Fundamental view:

The British pound stayed on front foot against the greenback during the trading course of the week. Hotter UK inflation and dovish Fed were the major catalysts in driving the quote, Russia-Ukraine crisis that dominated all through the week on financial market had less impact the cable. UK annual inflation rate arrived at 5.5% which is a fresh 30-year high. Market rushed to an aggressive BOE rate hike expectation in the year ahead. On the other hand, US Federal Reserve officials are giving clues at upcoming rate hikes. The Federal Reserve released Minutes of the latest FOMC meeting on Wednesday, and the document portrayed that the policymakers are ready to rate hike and preparing for plans to reduce the balance sheet. However, Market expectation was not meet as voting members maintained a measured approach to monetary policy tightening.

Whereas Russia – Ukraine headlines dominated throughout the week while on Friday, Ukrainian military and rebels fired grenades and mortars in four Luhansk People’s Republic (LPR) localities, which are in the war-torn Donbass region. Risk off sentiment intensified on the the US’s warnings over a potential Russian incursion of Ukraine, which capped the Pound bulls. Amidst the Russia-Ukraine conflict, looming Brexit concerns took a back seat, as geopolitics led the way.

In this week, US PPI monthly report on 15th February and US Building Permits on 17th February boosted downtrend whereas UK Claimant Count Change on 15th February and UK CPI monthly report and EIA Crude Oil Stocks Change on 16th February boosted uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are UK Markit/CIPS Manufacturing PMI, Fed Governor Bowman Speech at Feb 21, BoE Deputy Governor Markets and Banking Ramsden Speech, US CB Consumer Confidence Index at Feb 22, US GDP quarterly report, Initial Jobless Claims, EIA Crude Oil Stocks Change at Feb 24, US Core Durable Goods Orders monthly report and Michigan Consumer Sentiment at Feb 25.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.01% lower than the previous week. Maintaining high at 1.3642 and low at 1.3486 showed a movement of 156 pips.

In the upcoming week we expect GBP/USD to show a bullish trend. The currency pair is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1.3657 may open a clean path towards 1.3728 and may take a way up to 1.3813. Should 1.3501 prove to be unreliable support, the GBPUSD may sink downwards 1.3416 and 1.3345 respectively. Chart formation of ascending scallop pattern in H4 chart favors prospects of a bullish trend. Bullish engulfing pattern formation escalates the expectation for a bullish trend.

Preference
Buy: 1.3587 target at 1.3727 and stop loss at 1.3496

 

Alternate Scenario
Sell: 1.3496 target at 1.3346 and stop loss at 1.3587

EUR/USD Weekly Forecast (21st February 2022 – 25th February 2022)

Fundamental view:

Euro dropped against the US dollar but traded within a tight range during trading course of the week. Ukraine – Russia Saga was dominant factor in the financial market which also weighed on the perceived riskier asset Euro. During this week, Market sentiment was sour with multiple Russia – Ukraine headlines weighing on the market, finishing with week with Moscow announcing new drills on Saturday. Thus traders pulled back from the riskier assets and opted safe haven assets like gold keeping USD aside.

Meanwhile, US Federal Reserve officials are giving clues at upcoming rate hikes. The Federal Reserve released Minutes of the latest FOMC meeting on Wednesday, and the document portrayed that the policymakers are ready to rate hike and preparing for plans to reduce the balance sheet. However, Market expectation was not meet as voting members maintained a measured approach to monetary policy tightening. Dovish Fed weighed on the US dollar. This may be one of the key catalyst in making Euro trade in a tight range.

In this week, Eurozone CPI monthly report on 15th February and US Initial Jobless claims on 17th February favored bullish trend whereas US PPI monthly report on 15th February and Eurozone Trade Balance on 17th February favored bearish trend for the quote.

The major economic events deciding the movement of the pair in the next week are Fed Governor Bowman Speech at Feb 21, Eurozone Ifo Business Climate, US CB Consumer Confidence Index at Feb 22, US GDP quarterly report, Initial Jobless Claims, EIA Crude Oil Stocks Change at Feb 24, Eurozone GDP quarterly report, US Core Durable Goods Orders monthly report and Michigan Consumer Sentiment at Feb 25.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.87% lower than the previous week. Maintaining high at 1.1395 and low at 1.1280 showed a movement of 115 pips.

In the upcoming week we expect EUR/USD to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the downside. Should 1.1267 proves to be unreliable support then the pair may fall further to 1.1216 and 1.1152 respectively whereas a solid breakout above 1.1382 will open a clear path upward to 1.1446 and then will further raise up to 1.1497. Chart formation of a symmetrical triangle pattern breakout downside in H4 chart sets prospects for a bearish trend. Bearish engulfing formation in H4 chart escalates the expectation for a bearish trend.

Preference
Sell: 1.1318 target at 1.1217 and stop loss at 1.1387

 

Alternate Scenario
Buy: 1.1387 target at 1.1496 and stop loss at 1.1318