MARKET UPDATE:
After Fed minutes and inflation data, Wall Street closes lower.
The Federal Reserve’s March policy meeting minutes revealed that numerous FOMC members were concerned about the regional bank liquidity situation, which contributed to a decline in U.S. markets on Wednesday. The minutes came after a lower-than-anticipated inflation report, which contradicted stickier underlying statistics and increased the chance that the Fed will raise interest rates again when it meets next month. The session ended with all three of the major U.S. market indices closing lower.
Greg Bassuk, chief executive of AXS Investments in New York, stated, “The minutes were clear that there is ongoing Fed concern with respect to the banking crisis as well as elevated prices.” As market players analyzed the Consumer Price Index (CPI) from the Labour Department, the indices began to sway.
The S&P 500 posted 12 new 52-week highs and two new lows; the Nasdaq Composite recorded 64 new highs and 187 new lows.
Considering upcoming corporate earnings and the release of the PPI (producer prices) report, this week is “an inflection point,” according to Bassuk. Investors are overreacting to any indication—positive or negative—of Fed rate hike policy because the economic data has been so conflicting. Investors must fasten their seatbelts since volatility will persist. There is so much going on right now that both Wall Street and Main Street are experiencing uneasiness.
What happened in the Asian session?
The release of the M2 Money Stock y/y data, which met the previous number of 2.6%, was barely impacted by the Japanese yen.
The number of jobs added in Australia was 53,0K, above the 20.8K expected by the market. The nation’s unemployment rate stayed at 3.5% in the meantime. The Chinese trade balance also came in with a surplus of 601 billion, which was more than the predicted 275 billion. These developments might strengthen the AUD.
What does it mean for the Europe & US Sessions?
The AUD/USD pair will probably try the resistance again after testing it at 0.6720 during the Asian session, supported by the generally upbeat data releases from Australia and China. Bulls that were successful would rise to 0.6750 before reaching the round number at 0.6800. On the other hand, an hourly close below 0.6675 might send the bulls of the pair to the intermediate trough of the timeframe, which is located near 0.6640.
The Canadian Dollar (CAD)
Key news events today
BOC Gov Macklem Speaks
What can we expect from CAD today?
At the IMF Spring Meetings in Washington, DC, BoC Governor Tiff Macklem will give a discussion on Canadian economic expansion and inflation. For its most recent monetary policy decision, the chief is likely to reiterate the position of holding rates constant.
Central Bank Notes:
- Bank of Canada holds its target for the overnight rate at 4.5%
- Labour markets remain tight with persistent price pressures, especially for services
- Economic growth in Q1 looks to be stronger than projected; to be weak through the remainder of this year before strengthening gradually next year
- Prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 7 June 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The next data releases for EUR include the forecasted 0.8% German Final CPI, a predicted 0.5% Italian Industrial Production rebound from the previous -0.7%, and a predicted 0.9% increase in Eurozone Industrial Production m/m. Depending on the outcome of the Spanish 10-year Bond Auction, the EUR may change, and President of the German Buba Nagel’s speech may provide information on the nation’s monetary policy.
Central Bank Notes:
- ECB raised interest rates by 50 basis points to ensure the 2% inflation target is met
- Inflation is projected to average 5.3% in 2023, with growth at 1%, and underlying price pressures remain strong
- The bank will continue to monitor market tensions closely and will be data-dependent in its policy rate decisions
- Next meeting on 4 May 2023
Next 24 Hours Bias
Mixed
The Pound (GBP)
Key news events today
BOE Gov Bailey Speaks
What can we expect from GBP today?
The GDP m/m data for the UK will soon be released, and it is anticipated that the number will drop from 0.3% to 0.1%, showing that the economy’s growth rate is declining. This could reduce the value of the GBP since investors could be less likely to retain it if they expect the economy to perform worse.
Central Bank Notes:
- The BoE’s MPC increased the Bank Rate by 25bps to 4.25%, with a majority of 7-2 in favour of the hike
- The UK banking system is judged to be robust and resilient.
- CPI inflation increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
- The MPC will continue to monitor inflationary pressures and adjust Bank Rate as necessary.
- Next meeting on 11 May 2023
Next 24 Hours Bias
Weak Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Due to the rising demand for the commodity, the weaker USD caused by a stable inflation environment should continue to drive up oil prices. Gains may be somewhat constrained by the unexpected rise in Crude Oil Inventories of 0.6 million (anticipated -1.0 million, latest -3.7 million).
Next 24 Hours Bias
Weak Bullish
Global Markets:
Asian Stock Markets: Nikkei up 0.26%, Shanghai Composite down 0.27%, Hang Seng up 0.17%, ASX down 0.27%
European equities, the DAX futures up 0.08%, CAC 40 up 0.99%, FTSE down 0.11%.
US Stock Market: Dow jones down 0.11%, S&P 500 down at 0.41%, Nasdaq 100 down at 0.85%.
Commodities: Gold at $2027.81 (+0.7%), Silver at $25.60 (+0.49%), Brent Oil at $87.26 (-0.07%), WTI Oil at $83.25 (-0.01%)
News & Data
- (USD) PPI (MoM) (Mar) Forecast 0.1%, Previous –0.1% at 18:00
- (USD) Initial Jobless Claims Forecast 232K, Previous 228K at 18:00
- (EUR) German CPI (MoM) (Mar) Actual 0.8%, Forecast 0.8%, Previous 0.8% at 11:30
- (GBP) Manufacturing Production (MoM) (Feb) Actual 0.0%, Forecast 0.2%, Previous –0.4% at 11:30
- (AUD) Employment Change (Mar) Actual 53.0K, Forecast 20.0K, Previous 64.6K at 07:00
Technical Outlook
GBPUSD
Given the present bearish trend on the GBP/USD chart, it is possible that price declines will continue in the near term. The price is around 1.2485 as of this writing.
The price may make a bearish response off the first resistance level of 1.2521 and fall to the first support level of 1.2428 if the bearish trend persists. This level of support, which overlaps with another level, has been effective in keeping the price elevated.
The second support level at 1.2343, which is also an overlap support level that the price has previously bounced off, would be the next support level if the price were to break through the first one.
On the resistance side, the first barrier is located around 1.2521 and is a pullback barrier as well as a 61.80% Fibonacci projection level. This gives it a significant amount of resistance that the price might find difficult to overcome.
The second resistance level at 1.2588, which is a swing-high resistance level and the peak of a prior bullish trend, would be the next resistance level if the price were to break through the first resistance level. This level is a powerful level of resistance because it also coincides with a 138.20% Fibonacci Extension level.
EURUSD
Since the EUR/USD chart is now positive, it is possible that price increases may continue soon. The price is around 1.0985 as of this writing.
The price may rise further if the positive trend holds, possibly reaching the first resistance level of 1.1022. This resistance level is a significant level of resistance because it is a swing high resistance and coincides with a -27% Fibonacci Expansion level.
The second resistance level, which is a swing high resistance level at 1.1056, which represents the peak of a previous bullish trend, will act as resistance if the price breaches the first resistance level. This level is a potent degree of resistance because it also corresponds with a 161.80% Fibonacci Extension level.
The first support level, which is an overlap support level, is at 1.0932 on the support side. This level has been tested numerous times and has proven to be strong in maintaining the price.
The second support level at 1.0833, which is a swing-low support level that the price has already rebounded off several times, would be the next support level if the price were to fall even more. Given that it has been tried and tested numerous times, this level is likewise a strong level of support.
AUDUSD
The AUD/USD chart is currently bullish, which means that additional price increases may be on the horizon. The price is circling 0.6708 as of this writing.
A bullish extension into the first resistance level of 0.6726 is possible. This resistance level, an overlap resistance level, has previously been difficult for the price to overcome. Additionally, it is a powerful level of resistance that can be challenging for the price to overcome because it is also a 61.80% Fibonacci Retracement level.
The second resistance level at 0.6784, a multi-swing high resistance level, would be the next barrier to price growth if the first resistance level were to be broken. Although there are no important Fibonacci levels that coincide with this level, it has historically been a powerful level of resistance.
On the support side, the first support level, an overlap support level that the price has previously rebounded off, is at 0.6666. The second support level, which is a multi-swing low support level, is the next level of support and is located at 0.6623.
USDJPY
There is currently bullish momentum on the USD/JPY chart, suggesting that price increases may continue soon. 132.68 is about where the market price is right now.
However, there is also a chance for a bearish continuation in the direction of the 131.81 first support level. This level of support has undergone numerous tests and is regarded as strong support. It also happens to be at a 61.80% Fibonacci Retracement level, adding to its significance.
The second support level at 130.53 would act as support if the price were to breach the first support level. Another overlap support level from which the price has previously rebounded is this one.
On the resistance side, the price has previously struggled to break through the overlap resistance level at the first resistance level, which is located at 133.76. This level is a powerful level of resistance that might prevent the price from maintaining its bullish momentum because it also corresponds with a 50% Fibonacci Retracement level.
The second resistance level at 135.08 would be the next barrier to price growth if the first barrier were to be broken. As a 61.80% Fibonacci Retracement level, this overlap resistance level is another one that the price may find difficult to overcome.
DAX 40
As a result of breaking below an ascending support line, the GER30 chart is currently displaying negative momentum, which raises the possibility of further price drops in the near term.
Price may see a negative reaction off the first resistance level of 15710.4 and decline in the direction of the first support level of 15475.0. The first support level is an overlap level of support that has repeatedly held the price, making it a powerful level of support. The second support level, which is a pullback support level at 15305.0, would possibly offer some support if the stock were to keep falling.
On the resistance side, the price has previously had difficulty breaking through the first resistance level at 15710.4, which is a multi-swing high barrier level. The second resistance level, which is a swing high resistance level, is located at 15932.7.
Furthermore, the RSI is showing bearish divergence vs price, indicating that a reversal may be imminent, which might strengthen the bearish momentum on the GER30 chart even more.
WTI CRUDE OIL
WTI’s overall momentum seems to be in the negative direction. There is a chance that the price may respond negatively off the first barrier and fall to the first support. The first support is overlap support at 80.76, and the second support is a swing low support at 77.73. The swing-high resistance for the first resistance is at 85.32, and the swing-high resistance for the intermediate resistance is at 83.25.
In addition, the RSI is diverging negatively from the price, indicating a potential reversal. Overall, given the negative momentum on the chart, it appears that the price may drop further into the first support level. The major levels of support and resistance should be closely watched by traders, who should also keep an eye out for any breakouts or potential reversals that might indicate a change in momentum.
SILVER
Given that they are above the Ichi Moku cloud and an upward trend line, silver prices have been displaying bullish momentum. This means that price could increase even more. Prices may go in a bullish direction in the near term approaching the first resistance level. Currently, the ascending trend line and the strong overlap support at 25.122, which is also the first support level, indicate its validity. The price had previously bounced off the second support level, which is located at 24.471, a multi-swing low support.
The first resistance level, which is a swing high resistance and could serve as a potential price barrier on the upside, is located at 25.835. In addition, a pullback support at 25.122 serves as an intermediate support. Prices could move down towards the second support at 24.471 if they were to breach this interim level of support.
Overall, there is a bullish bias for silver prices, and prices may continue to rise in the direction of the first resistance level. A breach below the intermediate support level, however, would portend a change in the negative trend.
BITCOIN
The present positive momentum on the BTC/USD chart suggests that additional price increases may be on the horizon. The price has often bounced off the first support level, a pullback support level, at 28654 in the past. The price had previously bounced off the second support level, which is located at 26542, which is an overlap support level.
The initial resistance level, which is a swing high resistance level, is at 31761, and it is located on the resistance side. The second resistance level at 32951, which is also a swing high resistance level, would be reached if the price were to pass through the first resistance level.
Additionally, 30568, a multi-swing high resistance level, serves as an intermediate resistance level. The price might accelerate more strongly in a positive direction towards the first resistance level if it were to break through this level.
