April-26, 2022, Currency trading daily analysis and forex market forecast, by forex forum.
The U.S. Dollar Index extended gains on Tuesday and reached fresh two-year highs above the 102.00 level.
The greenback continues to strengthen across the board amid risk aversion and geopolitical concerns, along with prospects of a more aggressive tightening move by the Federal Reserve next week. Analysts expect a 50 bps rate hike on May 4, especially after Chair Jerome Powell noted that he believed it is appropriate to move faster.
On the other hand, the 101.00 area stands as the initial support level in case of corrections, followed by the 20-day SMA at the 100.10 zone. Loss of this latter could delay further gains exposing the 99.50 area. However, the dominant trend would remain tilted to the upside as long as the DXY holds above the ascending trendline from May 2021 lows, currently around 96.85.
On the other hand, EUR/USD remains downside for 100% forecast at 1.1494 to 1.0805 from 1.1184 at 1.0495. Firm break will pave the way to projection of 161.8% at 1.0069. Conversely, slight resistance. Above 1.0756 will neutralize the intraday bias first. But the trend will remain bearish as long as the resistance is at 1.0935 in case of recovery.
MAJOR RISK EVENTS IN THE WEEK AHEADOn Thursday the advance GPD figure for the US is due, already showing a much lower expectation compared to the previous figure.
We then see both EU and US inflation data which isn’t anticipated to change the current narrative if we see prints in line or exceeding expectations, however, we could see a temporary drop in the dollar basket (DXY) should US inflation figures come well below expectations due to the fact that markets have priced in aggressively higher rate hikes throughout the rest of the year. Therefore, a downward surprise could result in a repricing of the dollar as markets taper rate hike expectations.
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Elsewhere, Pound among worst performers
The pound is under pressure amid risk aversion. EUR/GBP trades at 0.8440, at the highest in three weeks, GBP/JPY bottomed at 160.40 (is down almost 300 pips for the day), and AUD/GBP is losing a hundred pips, reversing sharply from the monthly high it reached on Monday at 1.7885.
In Wall Street, the Dow Jones is falling by 1.46% and the Nasdaq tumbles by 3.10%. In Europe, the main stock indices are down 0.75% on average. Investors await earnings reports from Microsoft and Alphabet.
Moreover, The GBP/USD is falling for the fourth consecutive day, accumulating a decline of more than 400 pips. Technical indicators are in oversold territory but no signs of a consolidation or a correction are seen.
The negative momentum in cable remains intact. The next resistance might be seen around 1.2600, followed by 1.2580. On the upside, resistance levels are seen at 1.2665, followed by 1.2700 and 1.2770.
AUD/USD technical analysis
The AUDUSD move lower yesterday and in the process, took out the March 2022 low at 0.7165. The low price extended to 0.7134 in choppy trading around that old low level, but by the close was trading back above. In the early Asian session, the price continued its move to the upside help by news of PBOC vowing more support for the economy. However after the price reached a swing area between 0.7227 or 0.72348, the buyers turned sellers in the price has stepped lower since then.
The last two hourly bars have seen the AUDUSD price move back below the March 15 low at 0.7165. Stay below keeps the bears firmly in control.
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