AUD/USD Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

The Australian dollar has rallied against the American dollar during the week. The improved market mood acted as a tailwind for the Aussie. The reports that the Omicron variant might be less severe than feared helped in easing the worries about the continuous surge in new COVID-19 cases around the world and in turn, improved the market sentiment.

According to a Reuters poll of economists, The Reserve Bank of Australia (RBA) is expected to raise interest rates in early 2023, and possibly sooner, who brought forward their rate hike expectations for the second straight month. Against a backdrop of rising inflation in Australia, the RBA is now predicted to lift its cash rate from a record low 0.10% in the first quarter of 2023. On the other hand, the Hawkish Fed may put a cap on the AUD/USD bulls.

US 3-Month Bill Auction on 20th December and US Core Durable Goods Orders monthly report on 23rd December whereas on the other hand RBA Meeting Minutes on 21st December,US Existing Home Sales on 22nd and RBA Private Sector Credit monthly report on 23rd December framed uptrend for the pair December.

The major economic events deciding the movement of the pair in the next week are US S&P/CS HPI Composite-20 yearly report at Dec 28, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.39% higher than the previous week. Maintaining high at 0.7251 and low at 0.7082 showed a movement of 169 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 0.7285 may open a clean path towards 0.7352 and may take a way up to 0.7454. Should 0.7116 prove to be unreliable support, the AUDUSD may sink downwards 0.7014 and 0.6947 respectively. In H4 chart bullish flag pattern formation favors prospects of a bullish trend. Also to be noted Bullish engulfing formation exerts the expectation of uptrend for the pair.

Preference
Buy: 0.7225 target at 0.7370 and stop loss at 0.7111

 

Alternate Scenario
Sell: 0.7111 target at 0.6948 and stop loss at 0.7225

USD/JPY Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

The US dollar moved higher against the Japanese yen and reached December high of  114.49 on Friday. The reason for this can be linked to the diminishing fear of Omicron and the Hawkish fed. The reports that the Omicron variant might be less severe than feared helped in easing the worries about the continuous surge in new COVID-19 cases around the world and in turn, improved the market sentiment. US inflation scored another dismal record in November thus increasing the possibility that the Federal Reserve could act on interest rates in the first quarter.

Federal Reserve Chair Jerome Powell reassured that it is about to to end its bond program before hiking the fed funds rate after the meeting on December 15. Bond purchases are slated to end in March. On Friday after the December FOMC meeting, Fed governor Christopher Waller said in an appearance in New York, that the purpose of increasing the taper from $15 billion to $30 billion was to end the program in time for the FOMC meeting on March 15-16.

US Existing Home Sales on 22nd December and Japan Core CPI yearly report on 24th December favored downtrend Whereas US CB Leading Economic Index monthly report on 20th December and US Core Durable Goods Orders monthly report on 23rd December favored uptrend for the pair.

The major economic events deciding the movement of the pair in the next week are Japan Unemployment Rate and Japan Industrial Production monthly at Dec 27, US S&P/CS HPI Composite-20 yearly report at Dec 28, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.21% higher than the previous week. Maintaining high at 114.51 and low at 113.32 showed a movement of 119 pips.

In the upcoming week we expect USD/JPY 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 114.81 may open a clean path towards 115.26 and may take a way up to 116.00. Should 113.62 prove to be unreliable support, the USDJPY may sink downwards 112.88 and 112.43 respectively. In H4 chart, Formation of cup and handle pattern indicates reversal of the trend creating prospects of a bullish trend Along with a hammer formation braces our expectation.

Preference
Buy: 114.36 target at 115.45 and stop loss at 113.58

 

Alternate Scenario
Sell: 113.58 target at 112.44 and stop loss at 114.36

GBP/USD Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

The British pound attracted ‘buy the dip’ traders and closed high against the greenback during the trading course of the week.  The improved market mood could be the rationale behind the move. The reports that the Omicron variant might be less severe than feared helped in easing the worries about the continuous surge in new COVID-19 cases in the UK and improved the market mood. Moreover, a UK study indicated that Omicron infections are less likely to lead to hospitalization, which in turn fueled the Pound bulls. Alongside, subdued US dollar demand was also seen as another factor that provided boost to the sterling buyers.

On the other hand, The Brexit woes posed a challenge to the bulls. Moreover, Fawkish outlook of the Fed indicating at least three rate hikes next year limited the downside for the USD. Hence it creates a cautious outlook before positioning for any further appreciating move in the year-end thin liquidity.

US GDP quarterly report on 22nd December and US Core PCE Price Index monthly report on 23rd December framed bearish outlook whereas UK GDP yearly report  on 22nd December and US Initial Jobless Claims on 23rd December framed  bullish outlook for the pair

The major economic events deciding the movement of the pair in the next week are US S&P/CS HPI Composite-20 yearly report at Dec 28, UK Nationwide HPI yearly report, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.47% higher than the previous week. Maintaining high at 1.3437 and low at 1.3172 showed a movement of 265 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 1.3489 may open a clean path towards 1.3596 and may take a way up to 1.3754. Should 1.3224 prove to be unreliable support, the GBPUSD may sink downwards 1.3066 and 1.2959 respectively. Chart formation of ascending scallop pattern in H4 chart favors prospects of a bullish trend. Bullish spinning top pattern formation escalates the expectation for a bullish trend.

Preference
Buy: 1.3382 target at 1.3638 and stop loss at 1.3219

 

Alternate Scenario
Sell: 1.3219 target at 1.2961 and stop loss at 1.3382

EUR/USD Weekly Forecast (27th December 2021 – 31st December 2021)

Fundamental view:

The Euro initially tried to rally against the greenback but later gain up small gains in last 2 trading days of this week. This week was favorable to majors currencies against the greenback due to the upbeat market sentiment ahead of Christmas. The catalysts improving the market mood were the Omicron variant being 80% less susceptible to needing hospitalization.  Further in the UK, two studies reported the same results as in South Africa, though the percentage of people was between 50% to 70%. Moreover the US Food and Drug Administration (FDA) approved Covid-19 treatments by Pills by Pfizer and Merck. Elsewhere, It is worth recalling that the so-called dot plot indicated that the Fed could hike rates at least three times next year, this capped the bullish trend.

Euro zone PPI monthly report on 21st December and US Core Durable Goods Orders monthly report on 23rd December favored bearish trend on the other hand US Existing Home Sales on 22nd December and Euro zone GDP quarterly report on 23rd December favored bullish trend for the pair.

The major economic events deciding the movement of the pair in the next week are US S&P/CS HPI Composite-20 yearly report at Dec 28, ECB M3 Money Supply yearly report, EIA Crude Oil Stocks Change, US Pending Home Sales monthly report at Dec 29, Eurozone CP monthly report, Initial Jobless Claims and MNI Chicago Business Barometer at Dec 30.

EUR/USD Weekly outlook:

Technical View:

Last week’s high was 0.15% higher than the previous week. Maintaining high at 1.1343 and low at 1.1234 showed a movement of 109 pips.

In the upcoming week we expect EUR/USD to show a bullish trend. The currency pair is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1.1361 may open a clean path towards 1.1407 and may take a way up to 1.1470. Should 1.1252 prove to be unreliable support, the EURUSD may sink downwards 1.1189 and 1.1143 respectively. In H4 chart, if breakout of the Symmetrical triangle is to the upside then bullish expectation is favored. Also to be noted bullish engulfing formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1.1326 target at 1.1435 and stop loss at 1.1247

 

Alternate Scenario
Sell: 1.1247 target at 1.1144 and stop loss at 1.1326