There was a highly volatile week with no stable price direction from most of the major currency pairs. However, this week we expect an absence of high economic releases except for the US GDP revision and RBNZ cash rate. Get more insights for the new trading week with AtoZ Markets’ Forex Weekly Fundamental Forecast.
May 24, 2021, | AtoZ Markets–The US Dollar became weaker against major currencies as soon as the Non-Farm Payroll missed the expectation. Later on, the momentum was sustainable until Friday when investors experienced a stable rebound in the price. However, this week the US GDP revised for Q1 and RBNZ cash rate may provide further direction of the price.
Forex Weekly Fundamental Outlook- US GDP & RBNZ Cash Rate
For this week, we may see some decent movement in most of the major currency pairs. Let’s have a look at the forex Weekly Fundamental Outlook with the GBPUSD:
The New Zealand economy is recovering after the Covid-19 pandemic that caused much in 2020. It was the first country that was announced as infection-free with a high vaccination rate.
However, the new variant of the virus that came in other Asian continents became a matter of consideration to the New Zealand Economy. The government became cautious and took initial steps immediately against all the virus infection. In this situation, the New Zealand government may delay opening the country’s border where investors may see the Bank of New Zealand increase the interest rate in the second half of 2022.
Policymakers will meet on Wednesday where there is currently no change may come. However, RBNZ may provide a dovish tone saying that they will not consider it as easy if the inflation moves higher. Moreover, this Central Bank may provide comments on its large-scale asset purchase program. Currently, it is holding the central bank to buy Government Bonds that may exceed over 60% limit.
Based on the economic events of RBNZ, any dovish tone may provide a negative impact on the NZD/USD where the price may move down with a sharp decline.
- NZDUSD trend Expectation: Bearish
- Possible target level: 0.6947
- Possible Invalidation level: 0.7200
In the Eurozone, we may expect a quiet week as there are no significant economic releases for the coming days. However, there is a possibility of bullish momentum in the EURUSD due to the absence of breaking headlines.
The Eurozone bond yields are rising higher that may provide support to the Euro against the US Dollar. Therefore, the momentum is bullish unless there is an unexpected intervention from the ECB.
On the other hand, the situation may alter at the end of the week. The Eurozone economic sentiment indicator will come up on Friday along with the revised French and German GDP estimates for the first quarter.
Besides, there is no high impact news for the Euro but investors will closely monitor the current COVID-19 variant in India. Any significant negative effect might influence Eurozone countries to shut travel.
On the other hand, the US economy will see the Prelim GDP q/q where there is no possibility of a significant change. Lastly, the Core PCE Price Index m/m will work as a key price driver for the US economy.
- EUR/USD trend Expectation: Bearish
- Possible target level: 1.2100
- Possible Invalidation level: 1.2300
Japan is one of the major economies from the developed country that showed a negative GDP, where the Q1 GDP shrank by 5.1% quarter-over-quarter. It is the largest fall in another consensus before.
The weakness in the Japanese economy expanded to most of the sectors in the country. The quarterly household consumption was down by a 5.6% annualized rate while the capital spending was down by 5.5%.
The public sector has worked as a relative resilience in recent quarters except for the Q1 of 2021 as both public and private demand moved down.
The second-quarter activity may become challenging for the Japanese economy due to the state emergency in Tokyo and other continents.
The current analysts’ expectation is a 3.2% increase in the Q2 GDP for Japan. However, the current state emergency and the Asian variant may make BoJ worry
In the price chart, the US Dollar is still strong against the Japanese yen where investors may find a bullish movement if the US releases support.
- USD/JPY` trend Expectation: Bullish
- Possible target level: 1.2314
- Possible Invalidation level: 1.2120
Due to the absence of important macroeconomic releases investors failed to keep faith in the greenback that pushed the XAUUSD up.
Furthermore, gold worked as an attractive investment from the beginning of the last week as the price was moving up from the 200 days SMA.
The US treasury Yield lost almost 1% on Tuesday due to the losing interest in the USD. The continuous Dollar weakness pushed the USD index to move down to 89.86, which is the worst in 3 months.
This week, there are no significant macroeconomic releases except the second estimate of the Q1 GDP. On Tuesday, the US consumer confidence may show a better-than-expected result that may trigger the consumer sentiment.
The main attraction for investors will be towards the PCE price index, on Friday. Earlier this month, there was a sharp movement in the CPI that cost a 1% loss in the XAU/USD on the daily basis. For this week, any sharp bullish movement in the PCE price index may bring a positive sentiment for the USD
- XAU/USD trend Expectation: Bearish
- Possible target level: 1825.00
- Possible Invalidation level: 1900.00
Bitcoin price moved down from $58021 to $30,000 level within 7 days of trading activity. Therefore, the massive fall in the BTC created a widespread panic for investors. However, some investors became scared of the massive fall while others are accumulating their positions.
The main reason behind the massive bearish pressure came from Elon Musk’s statement stating that Tesla will not accept Bitcoin as a payment method. Therefore, investors became confused as they consider Elon as a strong influencer in the Crypto market.
Although the Tesla CEO cleared the confusion with a tweet, the BTC price moved down after another pressure came from Beijing.
On the other hand, the recent report regarding the capital gain tax that increased by 50% from late April may influence investors to keep faith in crypto assets. Besides, the hash rate plummeted almost 20% over the past week. The continuous drop of the hash rate may keep the BTC pressure on the downside.
- Bitcoin trend Expectation: Bullish
- Possible target level: $47,000.00
- Possible Invalidation level: $30,000.00
Ethereum moved lower following Bitcoin that took the price down straight to the $2000 level. However, the significant point about Ethereum is its acceptance of DeFi projection.
Ethereum is still optimistic about its strong demand in Defi and other altcoins. However, with a dovish tone from Elon Musk, Etherum joined the bearish rally with Bitcoin and other cryptocurrencies.
As per the current market context, ETH is held by many investors and users that may push the price higher. The primary target of ETH is $5,000 as per many analysts.
- Ethereum trend Expectation: Bullish
- Possible target level: $4400.00
- Possible Invalidation level: $1800.00
Nvidia is getting the strength in cloud gaming and self-driving cars. Therefore, new products and acquisitions are keeping Nvidia stock to investors as a significant price developer investment.
There was a bullish rally in the Nvidia stock after the news of Taiwan Semiconductor Manufacturing’s (TSM) plan for a $100 billion investment on the chip shortage recovery. Moreover, there are some other announcements that may push the Nvidia stock higher.
Based on the Q4 earnings, Nvidia sales moved higher by 61% with a 67% gain in the gaming chips and 97% for the data center chip sales. According to the Nvidia CEO, 2020 was a breakout year for Nvidia due to the release of different products.
Currently, analysts are expecting a 36% increase in EPS within fiscal 2022 with a 35% increase in revenue.
- Nvidia trend Expectation: Bullish
- Possible target level: $599.67
- Possible Invalidation level: $649.32
Alibaba stock is moving despite strong earnings and sales growth. It showed an earning that missed the analysts’ expectation but remained above the previous result.
In Q4, the earnings per share came at $1.58, which is 12% above the previous quarter. Moreover, the revenue came at $28.6 billion, 64% above the previous year.
Alibaba is among other companies that have a strong track record of providing sustainable growth. Therefore, investors may consider it as a stable investment opportunity after the current correction.
- Alibaba trend Expectation: Bearish
- Possible target level: $170.00
- Possible Invalidation level: $224.23
Overall, investors may see some decent movement this week despite the absence of high economic releases except the US GDP and RBNZ cash rate. On the other hand, the global market is still facing some pressure from the 3rd wave of COVID-19, especially in the Asian continent.
What is your opinion about the US GDP and RBNZ cash rate? Let us know in the comment section below!