XAU/USD Weekly Forecast (20th December 2021 – 24th December 2021)

Fundamental view:

The yellow metal traded in a tight range during the beginning of the week but later managed to portray a decisive rebound and broke above $1,800 on Friday and snapped a four-week bearish streak. The US central bank announced the monetary policy which was same as per the market  expectation. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying  $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month, and also means sooner rate hikes. Elsewhere, The Fed’s dot-plot now implies three rate hikes in 2022 and three more in 2023. Moreover, The inflation forecasts have been raised to 5.6% for 2021 and 2.6% for 2022, up from 4.2% and 2.2% previously.

Amidst the inflation fear, reports suggesting that the coronavirus Omicron variant is much more contagious than the Delta variant weighed heavily on market in the later half of the week which created risk aversion sentiment. Elsewhere, The UK reported more than 80,000 confirmed cases on Thursday and vaccine producers’ initial findings showed that Omicron was much more resilient against two shots than the previous variants. Reflecting the risk-averse market environment, gold continued to gather strength heading into the weekend.

The major economic events deciding the movement of the pair in the next week are GDP quarterly report, CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, Core Durable Goods Orders monthly report, Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 1.18% higher than the previous week. Maintaining high at 1814.3 and low at 1752.5 showed a movement of 618 pips.

In the upcoming week we expect XAU/USD to show a bullish trend. The Instrument is trading above the 100 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1823.7 may open a clean path towards 1849.9 and may take a way up to 1885.5. Should 1761.9 prove to be unreliable support, the XAUUSD may sink downwards 1726.3 and 1700.1 respectively. In H4 chart ascending scallop pattern favors prospects of a bullish trend. Also to be noted hammer formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1797.5 target at 1848.9 and stop loss at 1756.4

 

Alternate Scenario
Sell: 1756.4 target at 1701.7 and stop loss at 1797.5

AUD/USD Weekly Forecast (20th December 2021 – 24th December 2021)

Fundamental view:

The Australian dollar traded up and down against the greenback and ended the week at the 0.7120 level. The upbeat employment data was the major catalysts favoring the pair this week. The Fed announced the monetary policy this week which was same as market expectation. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying  $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month, and also means sooner rate hikes. Elsewhere, The Fed’s dot-plot now implies three rate hikes in 2022 and three more in 2023. Additionally, the central bank upwardly revised its inflation forecasts to 5.6% for 2021 and 2.6% for 2022, up from 4.2% and 2.2% previously.

On the other hand, Australia reported that it managed to create 366.1K job positions in November, which is far better than the 200K expected. The unemployment rate contracted to 4.6%, while the Participation Rate rose to 66.1%, both beating expectations and hinted at a hinting at a stronger economic recovery.

EIA Cushing Crude Oil Stocks Change on 15th December and Australia Employment Change and on 16th December framed uptrend whereas NAB Business Confidence on 14th December and US Building Permits on 16th December framed downtrend for the pair in this week.

The major economic events deciding the movement of the pair in the next week are RBA Meeting Minutes at Dec 21, US GDP quarterly report, US CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, US Core Durable Goods Orders monthly report, US Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 0.52% higher than the previous week. Maintaining high at 0.7223 and low at 0.7089 showed a movement of 134 pips.

In the upcoming week we expect AUD/USD to show a bearish trend.  The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the upside. Should 0.7067 proves to be unreliable support then the pair may fall further to 0.7011 and 0.6933 respectively whereas a solid breakout above 0.7201 will open a clear path upward to 0.7279 and then will further raise up to 0.7335. In H4 chart Symmetrical triangle breakout downside favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.

Preference
Sell: 0.7122 target at 0.6994 and stop loss at 0.7206

 

Alternate Scenario
Buy: 0.7206 target at 0.7334 and stop loss at 0.7122

USD/JPY Weekly Forecast (20th December 2021 – 24th December 2021)

Fundamental view:

The greenback initially rallied but later gave up gains against the Japanese yen during the trading course of the week. The most awaited Federal Reserve meeting since the November one,  the Fed advanced it’s exit from pandemic support from June to March and tripled its 2022 rate hike forecast. The monetary policy was same as market expectations which produced  negligible changes in the dollar. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month. The inflation forecasts have been raised to 5.6% for 2021 and 2.6% for 2022, up from 4.2% and 2.2% previously.

On the other hand, The Bank of Japan kept its overnight call rate at -01.%, completing its sixth year of negative rates, and reduced some of its pandemic business aid, again, to no market interest. While the Fed meeting dominating the market till Wednesday, the Rising covid cases of the recent variant Omicron bought the risk aversion sentiment back in the market which favored the Japanese yen off late.

BoJ Tankan Large All Industry Capex on 13th December and Philadelphia Fed Manufacturing Index on 16th December favored bearish trend whereas US Retail sales monthly report and EIA Crude Oil Stocks Change on 15th December and Japan Markit Manufacturing PMI on 16th December favored bullish trend for the pair in this week.

The major economic events deciding the movement of the pair in the next week are BoJ Monetary Policy Meeting Minutes at Dec 21, US GDP quarterly report, US CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, Japan Core CPI yearly report, US Core Durable Goods Orders monthly report, US Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23.

USD/JPY Weekly outlook:

Technical View:

Last week’s high was 0.28% higher than the previous week. Maintaining high at 114.27 and low at 113.14 showed a movement of 113 pips.

In the upcoming week we expect USD/JPY 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 114.21 may open a clean path towards 114.80 and may take a way up to 115.34. Should 113.08 prove to be unreliable support, the USDJPY may sink downwards 112.54 and 111.95 respectively. In H4 chart, Formation of cup and handle pattern indicates reversal of the trend creating prospects of a bullish trend Along with a bullish engulfing formation braces our expectation.

Preference
Buy: 113.69 target at 114.78 and stop loss at 113.03

 

Alternate Scenario
Sell: 113.03 target at 111.96 and stop loss at 113.69

GBP/USD Weekly Forecast (20th December 2021 – 24th December 2021)

Fundamental view:

The British pound initially rallied but later gave up the gains against the US dollar during the trading course of the week. Markets have initially reacted positively to the interest rate hike coming out of the Bank of England outweighing Omicron’s fears but have wiped out all of those gains from Thursday. The US Federal Reserve and the Bank of England made an announcement of their monetary policy decisions. The Fed made an increment in the reduction in bond-buying on a monthly basis to $30 billion, from $15 billion as announced in November, starting from January 2022. Which means that the central bank will stop buying  $20 billion Treasuries and $10 billion Mortgage-Backed Securities per month, and also means sooner rate hikes.

On the other hand, Bank of England after surprising in November by refusing from raising rates shocked markets by the rate hike. Bailey explained the move as reacting to high inflation – 5.1% according to the new read for November and rising wages. The near-unanimous 8:1 vote added impetus to the surprise, which boosted the sterling.  The rapid spread of the Omicron variant in the UK had a negative effect on the sterling. That said, Sterling was hurt more by the politics of dealing with the virus than its spread. Prime Minister Boris Johnson faced the largest rebellion of his Conservative Party so far in his premiership when passing new restrictions, amidst that other scandals also hurt his authority. 

US PPI monthly report on 14th December and UK Markit/CIPS Manufacturing PMI on 16th December created downtrend whereas UK Claimant Count Change on 14th December and US Initial Jobless Claims on 16th December created uptrend for the pair in this week.

The major economic events deciding the movement of the pair in the next week are UK Public Sector Net Borrowing at Dec 21, UK GDP quarterly report, US GDP quarterly report, US CB Consumer Confidence Index, EIA Crude Oil Stocks Change at Dec 22, US Core Durable Goods Orders monthly report, US Initial Jobless Claims and Michigan Consumer Sentiment at Dec 23.

GBP/USD Weekly outlook:

Technical View:

Last week’s high was 0.64% higher than the previous week. Maintaining high at 1.3374 and low at 1.3171 showed a movement of 203 pips.

In the upcoming week we expect GBP/USD to show a bearish trend. The currency pair is trading below the 200 Simple Moving Average and the MACD trades to the upside. Should 1.3147 proves to be unreliable support then the pair may fall further to 1.3057 and 1.2944 respectively whereas a solid breakout above 1.3350 will open a clear path upward to 1.3463 and then will further raise up to 1.3553. Chart formation of rising wedge pattern breakout in H4 chart creates prospects of a bearish trend. Bearish engulfing pattern formation further escalates the expectation for a bearish trend.

Preference
Sell: 1.3235 target at 1.3058 and stop loss at 1.3355

 

Alternate Scenario
Buy: 1.3355 target at 1.3552 and stop loss at 1.3235