Forex Weekly Forecast & FX Analysis January 3-7

EUR/USD

The Euro ended the year with a low volatility movement near the moving averages. The lack of volatility can be clearly seen in the oscillator, which can not move much away from the level of 50. If you look at the second fundamental indicator, the histogram, it looks down and also tends to zero. Once again, we can say that the range between 1.1280 and 1.1348 is important for the current price stage. However, we can also draw an upward trend line, which now coincides with the moving averages. As a result, this line together with the upper border of the channel form a triangle. We wait in which direction this triangle will be broken and then trade in the direction of the breakdown.

GBP/USD

The end of the year was positive for the British pound against the US dollar. The British currency has increased its value a lot, rising above the moving averages and the strong level of 1.3482. The only characteristic that can be used for trading is the divergence between the price and the indicators. The price continues to rise and the indicators are looking down. Given the fact that the divergence formation occurs near a strong level, we can consider trading downward. The most favourable time to open a position is when the price moves below the trend line or below the designated level.

USD/JPY

The dollar continues to strengthen its position against the Japanese yen. After the market rose above the level of 114,222, which we have been discussing several times in a row, the price continues to rise steadily. In the past week, the rise pushed the oscillators to the overbought area. The histogram repeats the monthly maximums. Thus, all factors suggest trading up. However, we are at the top of the market and we are already too late to follow the current growth. We should wait for a pullback and open a contract afterwards.

AUD/USD

The Australian dollar is rising against the US dollar and consolidating above the moving averages. After the last week of 2021 the price is moving horizontally near the strong level of 0.7265, while the indicators are looking down. It is an unusual divergence, but it gives you an opportunity to trade down towards another strong level of 0.7190.

USD/CAD

The US dollar continues to develop the corrective stage of the upward movement against the Canadian dollar. Globally, the uptrend still dominates, but at the stage of correction the market is moving down, and, what is very important - it is already below the moving averages. The oscillator is approaching the oversold area, and the histogram is close to updating the minimum values for the current price stage. Thus, we can assume that we are very close to the critical part of the corrective movement, which means that the market will have to return to its main trend. I would consider the options of trading upwards, however, it is possible to open a deal only if the price ends up above the level of 1.2774.

USD/CHF

The key characteristic of this currency pair is low volatility. The price, however, continues to decrease. As a result, we have reached the minimum values for more than a month. At the same time, if you look at the indicators, all of them are close to neutral values. There is no volatility, but the sellers' pressure is clearly traceable. In this situation, we can expect the market may not be able to move down strongly, and therefore we consider the options of upward correction to the indicated trend line.

USD/RUB

The key feature of the last week's trading on the US dollar against the Russian ruble is an abnormal engulfing pattern with huge candlestick bodies, which was formed at the top of the market. In just a few hours, the currency pair has gone from the level of 73.80 to 77.50. After that, within a few hours, the market made a downward movement of the same strength. For the second week in a row, we trace an abnormal upward surge, but a rather quick rebound downward. Therefore, we expect this currency pair to trade negatively in the coming week.

Gold

The price of gold continues to rise incrementally, and last week was no exception. Moreover, within the last week, the upward trend intensified, since the movement found support at the level of the moving averages and at the level of 1790.834. The most important characteristic is that the price of gold is rising and the indicators are looking down. Thus it is the divergence with three peaks. We can consider trading downwards towards the strong level and the moving averages.