Forex-novosti i prognoze od 19-12-2021

• AUD/USD refreshes intraday low after confirming bearish chart pattern.
• 100-SMA breakdown joins downbeat MACD, RSI to favor sellers.
• 200-SMA, wedge’s resistance line restricts short-term recovery.

AUD/USD takes offers around 0.7110 to refresh intraday low, extending Friday’s losses during Monday’s Asian session.

The pair’s reversal from 61.8% Fibonacci retracement (Fibo.) of mid-November to early December downside portrayed a rising wedge bearish chart pattern. The downside bias gains support from bearish MACD signals and descending RSI line.

However, a sustained break below the 100-SMA, near 0.7125 by the press time, becomes necessary for the AUD/USD sellers to aim for a theoretical target that signals fresh 2021 low surrounding 0.6880.

During the fall, the 0.7030 level and the 0.7000 threshold may act as intermediate halts before the lows marked during November 2020 and so far December 2021, near 0.6990, will also test the AUD/USD bears.

Alternatively, recovery moves may aim for 50% Fibo. level near 0.7180 but a convergence of the stated wedge’s resistance line and 200-SMA, around 0.7220, will challenge the AUD/USD bulls afterward.

Adding to the upside filters is the 61.8% Fibonacci retracement level near 0.7225 and late November’s swing high near 0.7275.

AUD/USD: Four-hour chart

Trend: Further weakness expected

• GBP/USD stays depressed around yearly low, dropped the most in five weeks the previous day.
• UK’s Brexit Minister Frost resigned, Lizz Truss to take the role.
• UK PM Johnson considers activity restrictions but Chancellor Sunak resists.
• Fed rate-hike talks renew, virus updates, Brexit news are also important amid light calendar.

GBP/USD refreshes intraday low to 1.3233 during the early Asian session on Monday. Recently elevated concerns over the coronavirus spread in the UK and Brexit updates could be held responsible for the cable pair traders’ disappointments despite the Bank of England’s (BOE) rate hike.

With a 52% weekly jump in the UK’s coronavirus cases, Prime Minister (PM) Boris Johnson seems to have activity restrictions during the Christmas celebrations. “The United Kingdom reported 82,886 new COVID-19 cases on Sunday and 45 deaths within 28 days of a positive test, government statistics showed,” said Reuters. On the other hand, “Prime Minister risks fresh row with the Cabinet as he considers 'light touch' plan to help curb the spread of Omicron Covid variant,” per the UK Telegraph. However, UK Chancellor Rishi Sunak is said to resist new virus-led activity restrictions before Christmas, as signaled by The Times.

Elsewhere, UK’s Brexit Minister Lord Frost resigned after conveying, “We have not made enough progress on NIP,” at the latest. Trade Minister Lizz Truss will be heading Brexit negotiations from now onward and is pressured to make Northern Ireland (NI) protocol work. As per The Independent, “Lord Frost’s replacement as Brexit minister will “need to find solutions” to make the Northern Ireland Protocol work, Stormont’s Deputy First Minister Michelle O’Neill has said.”

It’s worth noting that the Bank of England’s (BOE) rate hike portrayed inflation pressure and the fundamental strength of the UK’s economy. However, the fresh chatters over the Fed’s rate hike, recently renewed by Fed Board of Governors member Christopher Waller, gain major attention and weigh on the GBP/USD prices.

Additionally, disappointment over the US Build Back Better (BBB) stimulus plan also exert downside pressure on the GBP/USD prices, by way of the US dollar’s safe-haven demand. Recently, US Senator Joe Manchin rejected the Democratic push to back President Joe Biden’s aid package and raise concerns of no stimulus passage during the rest of 2021.

Amid these plays, US Treasury yields and the Wall Street benchmarks printed losses but the S&P 500 Futures rise 0.16% intraday by the press time.

Looking forward, an absence of major data/events keeps GBP/USD traders pushed towards risk catalysts for fresh impulse.

Technical analysis

Failures to rise past the early November lows near 1.3350 direct GBP/USD prices towards a six-week-old previous resistance line near 1.3145. During the fall, the yearly low of 1.3160 can offer an intermediate halt.

• NZD/USD remains depressed near intraday low after NZ trade numbers for November.
• New Zealand Trade Balance, Exports improves, Imports rise as well.
• Fed’s Waller renewed rate hike concerns, New Zealand experts warn of a jump in virus cases.
• Light calendar, year-end holiday mood may restrict movement but bears to keep the reins.

NZD/USD shrugs off upbeat New Zealand trade numbers during early Monday morning in Asia, refreshing intraday low to 0.6737 after the data release.

Following a central-bank-led drama during the last week, fears of the coronavirus variant linked to South Africa join fresh chatters surrounding the US Federal Reserve’s (Fed) rate hike in early 2022 seem to weigh on the Kiwi pair of late.

New Zealand (NZ) Trade Balance matched forecasts of $-6.047B with $-6.040B figures while Exports and Imports both grew to $5.86B and 6.73B versus $5.36B and $6.66B revised priors in that order. Earlier in the day, a private gauge of NZ consumer confidence showed pessimists having an upper hand for Q4 data. “Westpac-McDermott Miller consumer confidence index fell to 99.1 from 102.7 in the previous quarter. A reading above 100 indicates more optimists than pessimists,” said Reuters.

On Friday, comments from Fed Board of Governors member Christopher Waller propelled the US dollar by saying, per Reuters, “The ‘whole point’ of the Fed's decision to accelerate the pace of its QE taper was to make the March Fed meeting "live" for a first rate hike.”

Also weighing on the NZD/USD prices are the chatters over a jump in the covid cases like Australia’s New South Wales (NSW). NZ Herald said, “Covid-19 modeling experts warn the highly-transmissible Omicron variant poses a serious risk to a largely unrestricted summer. Thirteen cases of the variant have now been picked up in managed isolation and quarantine.”

On a different page, escalating tensions between China and the US also challenge the Kiwi prices due to Beijing’s trade ties with Auckland.

Amid these plays, the US 10-year Treasury yields dropped 1.5 basis points (bps) to 1.41% while Wall Street benchmarks closed red on Friday.

That said, NZD/USD traders are likely to witness further downside amid the market’s rush for risk-safety and an absence of fresh catalysts on the calendar. It's worth noting that the People's Bank of China (PBOC) is up for conveying its monetary policy results at 01:30 GMT with chatters surrounding further rate cuts, which in turn may favor the kiwi pair sellers.

Technical analysis

NZD/USD fades bounce off a descending support line from March, suggesting further weakness towards retesting the stated trend line support near 0.6700. However, oversold RSI conditions hint at a bounce from the stated support line, a break of which will open doors for a downward trajectory towards late 2020 bottom near 0.6590.

On the contrary, a clear upside break of 21-DMA level near 0.6800 will need validation form September’s low close to 0.6860 before recalling the NZD/USD bulls.

Reuters reported that ''Australian officials on Sunday said there was no need to clamp down on Christmas festivities even as new COVID-19 infections climbed in Sydney, with the country's high vaccination rate helping keep people out of hospital.''

''Health Minister Greg Hunt said he was confident Australia would not need to follow the Netherlands, which has reimposed a strict lockdown over the Christmas and New Year period to curb the spread of the highly contagious Omicron variant.''

Key notes

• New South Wales cases hit record 2,566.
• Total Australia new cases at 3,958.
• States say no new lockdowns needed.

AUD/USD is otherwise back on the offer as per Friday's closing price:

• AUD/USD is on the defensive meeting weekly resistance

• EUR/USD in charge on the back of the daily bearish engulfing candle. 
• There are prospects of a meanwhile correction as per the lower time frames. 

EUR/USD is on the back foot for the start of the week following a strong offer on Friday as the US dollar firms around central bank themes and risk-off tones. 

The following illustrates EUR/USD's technical outlook from a daily and hourly perspective. 

EUR/USD daily chart

As per the daily chart, the price has penetrated the prior daily lows in a strong bearish engulfing candle. This leaves the bias with the bears on the way to a test of 1.12 the figure for the week ahead.

EUR/USD H1 chart

The euro's hourly chart sees the price in a strong downtrend also. However, there is scope for a meanwhile correction back to test above 1.1250 towards a 50% mean reversion that has a confluence with prior lows and previous support structure. 

• AUD/USD meets weekly resistance that puts the focus on the downside for the week ahead.
• Central bank divergence remains the driving force, US dollar is firming.

AUD/USD ended the week on the back foot as it ran into a layer of weekly resistance just ahead of 0.73 the figure. Down some 0.8% on the day, the pair finished Friday's session at 0.7223 after travelling between a range of 0.7122 and 0.7184. 

The Australian dollar was unable o maximise on the mid-week blockbuster employment data and was capped around 0.7223 the high for the week. The US dollar found a last-minute bid during a risk-off US session and the US Dollar Index finished the week above the 96.00 figure for the third week in a row.

Central banks were the driving force with the Bank of England surprisingly hawkish, the European Central bank more hawkish than expected and the Federal Reserve ramping up rate hike expectations also. 

This leaves the Reserve Bank of Australia lagging in this regard and the divergence between the central banks is a weight on the currency. Having said that,  the recent string of stronger data supports prospects for an end of QE at the start of the new year.

For instance, a 366k monthly increase in employment was twice as strong as expected, considerably stronger than the bounce in June 2020 and therefore the biggest gain on record. In this regard, the RBA minutes will be a key event for the currency this week and analysts at TD Securities explained that ''markets are likely to focus on QE discussions and their impact on the rate hike timeline.'' ''Governor Lowe's recent speech noted 3 criteria for the Bank's QE decision: 1) other CB actions, 2) bond market functioning, 3) actual and expected progress towards employment and inflation target goals.''

AUD/USD technical analysis

As illustrated, the price reached a 38.2% Fibonacci retracement level on the weekly time frame through 0.72 the figure and would be expected to struggle at this juncture. This could result in a meanwhile downside correction for the week ahead and potentially lead to a downside continuation for the medium term.