FUNDAMENTAL REPORT FORECAST
MARKET UPDATE:
On expectations of a rate increase, the dollar rises 0.5%.
As rate hike expectations in the US rise ahead of the Fed’s May rate announcement, the US dollar has increased by 0.5% over the last few trading days. The market is once again heavily pricing in a 25bps raise from the FOMC in a few weeks because of Friday’s somewhat better-than-expected non-farm payroll data, an upward revision to last month’s number, and a decline in the unemployment rate. As we hear from numerous FOMC members later this week along with the important US data, we can anticipate additional volatility in the FX market.
Prior to inflation data, the stock market is calm.
Over the Easter Monday weekend, US stock markets saw relatively light trading. The major indices all saw little in the way of movement and volume; the Dow increased 0.3%, the S&P 0.1%, and the Nasdaq ended slightly south of flat. This week, as the market adjusts to shifting interest rate expectations and general sentiment, investors may expect increased range volatility. As traders attempt to balance the impact of data showing strong inflation against worries over recessionary conditions, we have seen mood shift nearly daily.
This week will be the calm before the storm.
After the tranquilly of the holiday markets, traders are preparing for a deluge of new information when they return from their Easter vacations today. The most recent CPI, PPI, and retail sales data, as well as the minutes from the most recent Fed meeting, are important US inputs. Several central bank speakers are scheduled throughout the year, in addition to the Bank of Canada’s rate announcement. Few believe we have seen the last of the volatility that investors have experienced over the past few weeks.
What happened in the Asian session?
While the NAB Business Confidence report showed a value of -1, the Australian Westpac Consumer Sentiment report indicated an increase of 9.4% (previously 0.0%). (Previous -4). The PPI was -2.5% (expected -2.5%) and the Chinese CPI was 0.7% (anticipated: 1.0%) for March 2023, respectively. These lower numbers point to lower inflationary pressures and Chinese production costs, which might result in less demand for the AUD. The effect on the AUD is uneven overall.
What does it mean for the Europe & US Sessions?
The best currency pairs to trade during the European session are AUD/USD, USD/JPY, and EUR/USD because currency-specific data releases are still scheduled. The speeches that members of the FOMC committee are scheduled to give in the second half of the US session could worsen the patterns that were formed during the session.
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
According to a recent IMF analysis, interest rates will soon reach their pre-pandemic levels. The “zero lower bound” may be approached by industrialised economies as a result, while rates may gradually drop in emerging nations. These changes could influence the price of gold because investors may turn away from gold in favour of alternative investments with higher returns when interest rates rise.
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Given that China is New Zealand’s major trading partner, the impending data releases for China, including CPI, PPI, New Loans, and M2 Money Supply, are expected to influence the NZD. Indicators for the next Chinese data releases are generally conflicting, with some pointing to stability and others to a sustained slowdown.
Central Bank Notes:
- OCR increased by 50bps from 4.75% to 5.25%
- Recent severe weather events in the North Island have led to higher prices, increasing the risk of inflation expectations exceeding the target range.
- New Zealand’s economic growth is expected to slow through 2023 due to the slowing global economy, reduced residential building activity, and the ongoing effects of monetary policy tightening.
- Next meeting is on 25 May 2023
Next 24 Hours Bias
Mixed
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
If a sustained decrease in this data materializes, it is anticipated that the Japanese yen would suffer when the Preliminary Machine Tool Orders y/y data (prior -10.7%) is released soon.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Next 24 Hours Bias
Weak Bearish
Global Markets:
Asian Stock Markets: Nikkei up 1.05%, Shanghai Composite down 0.05%, Hang Seng up 0.76%, ASX up 1.26%
European equities, the DAX futures up 0.56%, CAC 40 up 0.81%, FTSE up 0.41%.
US Stock Market: Dow jones up 0.12%, S&P 500 down at 0.15%, Nasdaq 100 down at 0.03%.
Commodities: Gold at $2005.08 (+0.72%), Silver at $25.02 (+0.71%), Brent Oil at $84.74 (+0.67%), WTI Oil at $80.37 (+0.79%)
News & Data
- (USD) EIA Shor-term Energy Outlook at 21:30
- (EUR) Retail Sales (MoM) (Feb) Actual -0.8%, Forecast –0.8%, Previous 0.8% at 14:30
- (CNY) CPI (MoM) (Mar) Actual –0.3%, Forecast 0.2%, Previous –0.5% at 07:00
Technical Outlook
GBPUSD
Even though the GBP/USD chart’s ascending support line was broken, potentially causing a negative move, the overall trend is still optimistic. The possibility of a positive continuation towards the first resistance level is one of the elements supporting the bullish momentum.
The current GBP/USD first support level is located around 1.2274. This is a strong overlap support level, and it is followed by a second overlap support level at 1.2202. Price may potentially rise to the first resistance level at 1.2425 if it were to bounce off one of these support levels. This barrier level overlaps with another resistance level, and a break above it would signal a continuation of the bullish trend in the direction of the second resistance level at 1.2519.
It’s important to remember that there is a second overlap support level, an intermediate support level, at 1.2343. If the price were to decline furthermore, this may be a possible region for a bounce.
EURUSD
Bullish momentum is currently visible on the EUR/USD chart. Price can go in a bullish direction approaching the first resistance. The first support level, which also happens to be the 38.20% Fibonacci retracement level, is at 1.0797. The second support level, which also overlaps with the 50% Fibonacci retracement level, is located at 1.0740.
On the other hand, the overlap resistance level at the first level is at 1.0932. The second resistance level, which is a swing high resistance level, is located at 1.1022.
In addition to these levels, a swing low support level at 1.0833 serves as an intermediate support level.
AUDUSD
The AUD/USD chart’s overall momentum is currently bearish, with the price breaking below an ascending support line and potentially beginning a bearish move. This implies that there might be more room for the duo to fall.
When considering prospective price changes, the AUD/USD pair may respond negatively and fall to the first support level after hitting the first resistance level. The initial support is a swing low support and is situated at 0.6623. The next support, a multi-swing low support, lies at 0.6579 should price break through this level.
In contrast, an overlap resistance level at 0.6726 serves as the first resistance level. Price might potentially fall to the first support at 0.6623 if it bounces off this level. The second resistance level, which has seen multiple swings, is located at 0.6784.
Between the present price and the first resistance level, at 0.6666, there is also an overlap resistance level that serves as an intermediate resistance.
USDJPY
The USD/JPY chart is currently displaying a bearish overall momentum, indicating that a price decline may be imminent. Looking at the chart, the first resistance level at 133.76, which is a significant retreat barrier level and coincides with the 78.60% Fibonacci projection, may trigger a bearish reaction. Price may drop towards the first support level at 131.81 if it breaks through this resistance level. The 61.80% Fibonacci retracement lines up with this level, which makes it a suitable level for price to perhaps bounce off since it is an overlap support level.
Price might fall towards the second support at 130.53, which is also an overlap support level, if it were to breach the first support. The second resistance level at 134.08, which is an overlap resistance level and has the 61.80% Fibonacci retracement aligning up with it, could potentially be reached if price were to rise above the first obstacle and break through it.
DOW JONES
The Dow Jones chart’s general momentum is bullish, and there is a chance that it will continue in that direction towards the first resistance mark. Price is above the Ichi Moku cloud and has broken above an ascending trend line, both of which are positive indications, supporting this momentum.
The first support level, which is a multi-swing low support level, is located at 33,375.66. It has a high level of support as a result. Price may advance towards the first resistance level if it declines and then bounces off this support.
The second support level, which serves as a pullback support level, is located at 32,931.22. This level has been put to the test numerous times, making it a powerful degree of assistance. Price may advance towards the first resistance level if it declines and then bounces off this support.
The first resistance level, which is a pullback resistance level, is located at 33,849.72. This level is a powerful level of resistance because it coincides with a 78.60% Fibonacci retracement. Price may move upward towards the second resistance level if it were to break through this resistance level.
The second resistance level, which is a swing high resistance level, is located at 34,205.27. This level has been put to the test numerous times, making it a powerful degree of resistance. Price might potentially increase much more if it were to surpass this resistance level.
WTI CRUDE OIL
The momentum of the chart appears to be bearish, and crude oil prices have recently been in a bearish trend. The price of WTI crude oil may drop towards the first support level at 77.73 if the bearish trend persists. Its significance as a support level is increased by the fact that this level is a pullback support and that it is also at the 23.60% Fibonacci retracement level.
The next support level at 74.01 is also a place to be on the lookout for if the price keeps falling. Since this level is an overlap support and has historically served as a level of support, it is a good place for buyers to join the market.
On the other side, if WTI crude oil prices begin to increase, they can advance towards the first resistance level at 82.70. This level is a multi-swing high resistance, which means that it has historically served as a barrier to additional price increases.
If the bullish momentum persists, the intermediate resistance level at 81.04 is another important level to keep an eye on because it has historically held as a swing high resistance.
SILVER
The general momentum of the silver chart is trending bullish, and recent swings in the silver price have been bullish.
The price may go in the direction of the first support level at $24.597. The 38.20% Fibonacci retracement level coincides with this level, making it a potent support zone.
if the market drops below the first support level, it can reach the second support level at $23.999.
On the other hand, if there is a bullish reversal, the price may go in the direction of the first resistance level at $25.129. This level is a strong resistance area because it’s close to a previous swing high.
If the bullish momentum continues, the second resistance level at $25.494, which is also a significant barrier region because it coincides with a previous swing high, can be hit.
BITCOIN
Currently showing bullish momentum, Bitcoin’s (BTC/USD) price may continue reaching its first resistance level.
The first support level, which is a pullback support level, is at $28,657. At $26,498, which is an overlap support level, is the second support level.
The first resistance level, which is a swing high resistance level, is located at $31,398. The second resistance level at $32,384 may become relevant if BTC/USD is successful in breaking past this level.
It’s important to note that BTC/USD has recently had significant bullish momentum, increasing the likelihood of a rise to the first resistance level. In case of a potential downturn, it’s crucial to keep a watch on the support levels as well.
