. Fundamental Analysis Report With Charting Trends- 15-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 15 MAY 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 15 MAY 2023

15 May 2023

FUNDAMENTAL REPORT FORECAST

MARKET UPDATE:

US STOCKS-Indexes decline with shares of tech companies, and consumer confidence declines.

The recent spike in mega-cap shares contributed to a modest decline in U.S. stocks’ closing price on Friday, according to statistics showing that consumer sentiment in the country fell to a six-month low.

The blue-chip index’s longest losing streak in two months, the Dow barely dipped on its fifth consecutive down day.

Consumer confidence fell to its lowest level in May since November as concerns about the economy’s future increased because of the impasse over raising the federal government’s borrowing limit.

Investors worry that the Fed’s impulsive interest rate increases may cause the economy to enter a recession. Fed Governor Michelle Bowman stated on Friday that if inflation remains high, the Fed would likely need to raise rates further.

Australian Data Will Be Heavy This Week

Due to the influx of new data releases, traders of the Australian dollar are in for a hectic week. They follow the RBA’s unexpected rate hike in the first week of the month, and some traders may ask how reasonable the central bank was in its decision-making. Investors will first learn more about that choice on Tuesday when the RBA releases the minutes of its Monetary Policy Meeting. With the release of the Wage Price Index data on Wednesday and the Employment statistics on Thursday, the next few days are all about the robust employment market.

What happened in the Asia Session?

In contrast to the predicted 53.8, the Business NZ Services Index for New Zealand was 49.8. This shrinkage raises the possibility of a sluggish economy, which might be detrimental to the NZD. 

The PPI for Japan was 5.8%, higher than the predicted 5.6%, pointing to heightened inflationary pressures in the country.

What does it mean for the Europe & US Session?

Throughout the Asian session, the USD maintained its gains from last Friday, and it is anticipated to keep losing little gains versus the other major currencies throughout the European day. The dollar bulls may be inspired to reorganise and achieve 103.00 if the US Empire State Manufacturing Index data released during the US session is encouraging.

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

If this rising trend continues, the prior 9.4% improvement in consumer sentiment could support the AUD. Depending on whether the RBA’s outlook signals changes to interest rates or quantitative easing initiatives, the monetary policy meeting minutes could also affect the AUD. The AUD may be strengthened by positive data and a hawkish view, while it may be weakened by bad information or a dovish outlook.

Central Bank Notes:

  • The Official Cash Rate was increased by 25 basis points to 3.85%.
  • Inflation in Australia has passed its peak but remains high at 7%, and it may take some time to return to the target range.
  • GDP is forecast to increase by 1.25% this year and around 2% over the year to mid-2025.
  • Next meeting on 6 June 2023

Next 24 Hours Bias

Weak bullish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The New Zealand Dollar (NZD) is anticipated to be impacted by the upcoming Business NZ Services Index release, which was previously at 54.4. The NZD may strengthen if the index climbs, signalling expansion in the service sector. A decline can be a sign of a downturn in the economy, which might make the NZD weaker.  

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?

The delivery of two crucial economic data points might put the JPY under pressure. PPI is anticipated to decrease from the previous 7.2% to 5.6% y/y. Additionally, the year-over-year change in preliminary machine tool orders is -15.2%. The JPY may fall soon because of the decline in PPI and unfavourable tool orders, which point to a potential slowdown in the economy.

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 15 June 2023 

Next 24 Hours Bias

Weak bearish


Global Markets:

Asian Stock Markets: Nikkei up 0.81%, Shanghai Composite up 1.17%, Hang Seng up 1.75%, ASX up 0.14%

European equities, the DAX futures up 0.12%, CAC 40 up 0.40%, FTSE up 0.28%.

US Stock Market: Dow jones down 0.03%, S&P 500 down at 0.16%, Nasdaq 100 down at 0.36%.   

Commodities: Gold at $2016.43 (+0.26%), Silver at $24.02 (+0.28%), Brent Oil at $74.34 (+0.30%), WTI Oil at $70.30 (+0.37%)

News & Data

  • (AUD) Building Approval (MoM) (Apr) Actual –0.1%, Forecast –0.1%, Previous 3.9% at 07:00
  • (EUR) Industrial Production (MoM) (Mar) Actual –4.1%, Forecast 2.5%, Previous 0.2% at 14:30 
  • (CAD) Housing Starts (Apr) Forecast 224.6K, Previous 213.9K at 17:45
  • (CAD) Wholesale Sales (MoM) (Mar) Forecast –0.4%, Previous –1.7% at 18:00
  • (GBP) BoE MPC Member Pill Speaks at 21:30

Technical Outlook

GBPUSD

The GBP/USD is currently displaying strong bullish momentum, which is mainly caused by the pair’s position above a significant ascending trend line.

Price may make a positive bounce off the first support at 1.2421 in the near term, moving up towards the first resistance.

Price could move upward towards the first barrier at 1.2766 if it can successfully bounce off the first support. This level has historically provided significant retreat resistance, proving it to be a reliable price ceiling.

A middle resistance at 1.2634 is located between the current price and the first barrier. This multi-swing high resistance level, which also happens to be the 127.20% Fibonacci Extension.

The second support level at 1.2202, which also functions as an overlap support, may become the next target if the price falls below the first support.

EURUSD

Strong bullish momentum is currently being displayed by the EUR/USD, which is mostly being supported by its position above a significant ascending trend line. 

However, soon, it’s possible that the price will decline even further to the first support level at 1.0789 before reversing course.

Price may move up to the first resistance level at 1.1033, after it bounces off the first support level. This level has previously served as a multi-swing high resistance, indicating that it is a significant price barrier.

 The second support level arrives at 1.0516 in the case of a more pronounced negative retracement. If the price falls below the first support, this level, which is a big multi-swing low support, could act as a Launchpad for the price.

On the other hand, if the price moves past the first resistance level and continues to rise, it might eventually reach the second resistance level at 1.1166. 

AUDUSD

The AUD/USD is now in a bullish trend, indicating potential for more upward momentum.

Potentially, a bullish continuation towards the first resistance at 0.6797 could be seen soon. Given that it has previously served as a multi-swing high resistance level, this level may represent a big barrier for the price.

At 0.6556, the initial support level might act as a safety net. It is possible that this level is a trustworthy price floor because it is an overlap support and coincides with the 61.8% Fibonacci retracement.

Intermediate support is located at 0.6626, which sits in between the current price and the first resistance. 

Price might likely fall towards the second support level at 0.6389, which is an overlap support and corresponds with the 78.6% Fibonacci retracement, if it breaks through the first support level.

USDJPY

There is potential for more higher movement since the USD/JPY is now displaying positive momentum.

Potentially, a bullish continuation towards the first resistance level at 137.99 could be seen soon. As a swing high resistance level in the past, this level may present a substantial obstacle for the price.

However, before reaching the first resistance, the price might face some downward pressure. If this occurs, the first support level at 135.30 could provide a safety net. This level is an overlap support, suggesting it is a reliable price floor.

If the price drops below the first support, it could potentially move towards the second support level at 133.69, another overlap support, providing a secondary safety net.

DOW JONES

The DJ30 is currently showing positive momentum, and the price is above a significant ascending trend line, which suggests that bullish momentum may continue.

The price may briefly decline to the first support level at 32580.37 before rebounding and moving upward towards the first resistance level at 34263.61. The price may have a solid foundation because the initial support level has previously served as a retreat support.

The price may encounter a big barrier at the first resistance level at 34263.61, which has previously functioned as overlap resistance. A breach of this level would likely lead to a stronger bullish acceleration in the direction of the second resistance level at 35014.24, which has historically served as swing high resistance.

Between the present price and our initial barrier, there is an intermediate resistance at 33490.23. A bullish acceleration towards the first resistance might possibly be sparked if the price were to break through this intermediate obstacle.

WTI CRUDE OIL

Indicating a potential continuation in the direction of the first support level, the West Texas Intermediate (WTI) chart now exhibits an overall bearish trend.

The $62.27 mark is designated as the initial support. It has served as a swing-low support at this level.

A further intermediate support is located at $64.50. This level has supported multiple swing lows, demonstrating that it has consistently withstood selling pressure and highlighting its durability.

On the other hand, $70.53 marks the first resistance. Given that it has multiple swings, this high resistance level may represent a big price barrier.

Beyond that, $82.32 serves as the second resistance. This level has been tested several times as a ceiling and is designated as overlap resistance, therefore bullish traders may find it tough.

GOLD

The XAU/USD (Gold) chart’s overall momentum is positive, pointing to a likely continuation of this momentum into the first resistance level.

At $1958.54, the first support is visible. This level is working as an overlap support, indicating that it has previously served as both a level of resistance and a level of support.

The price of the second assistance is $1886.42. This level is also designated as an overlap support, which shows that it has previously resisted selling pressure on numerous times, hence highlighting its durability.

The initial resistance level is set at $2069.98 on the upswing. This resistance level has experienced multiple swings, making it a high point that halts the decline in price. Given its historical significance, it might be difficult for buyers to purchase.

In addition, a midpoint support is noted at $2001.82. This level functions as an overlap support and, further demonstrating its dependability, it coincides with the 23.60% Fibonacci retracement.

ETHEREUM

The general positive trend on the Ethereum (ETH/USD) chart raises the possibility of a bullish bounce off the first support and movement towards the first resistance.

 At $1792.13, the first support can be located. As an overlap support, this level has been tested several times and has established itself as a solid area where the price has previously attracted purchasing interest. This can be a crucial area where purchasers might enter again if the price dropped.

The second support is located at $1681.19 farther down. Like the first level, this one has served as an overlap support, highlighting its potency as a floor for Ethereum.

The initial resistance on the upswing is located around $2014.01. Given that it has historically been a multi-swing high resistance, this level may represent a big price barrier. Bypassing this obstacle, the positive trend might continue.