MARKET UPDATE:

ECB Announces 50bps Rate Increase

After the ECB announced a 50-basis point rate increase at its most recent meeting, the euro appreciated versus the dollar and on the crosses. The market had largely anticipated this in the weeks leading up to the conference, but in the days following the market upheaval caused by problems in the banking sector in both the US and Europe, the odds had drastically decreased. Several investors were upset when the central bank stuck to their guns on the extent of the hike because they had hoped for a small reprieve from them. The euro is currently trading above the 1.0600 mark, around the midpoint of the monthly range.

Nasdaq up 2.5% as markets rebound and banks recover.

As a result of the news that some of the largest banks in the nation will help the struggling First Republic Bank, US stock markets had a solid day. The S&P and Dow followed suit, closing 1.76% and 1.17%, respectively, while the Nasdaq took the lead and gained 2.48% overall. Investors are hopeful that the worst of the suffering is passed and that the problems with SVB and Signature Bank are isolated instances rather than a structural problem for the entire industry. Asian stock exchanges are expected to start out positively, but traders are nonetheless on guard considering recent developments.

Traders are expecting higher volatility today

As we approach the weekend, traders are preparing for increased volatility on the financial markets today. Investors have had a turbulent week, and the banking industry has received a lot of attention. There aren’t many economic data releases scheduled for today in the Asian and European sessions; but, once the North American session begins, attention will turn to the most recent sentiment data from the University of Michigan. To any new information or surprises from the banking industry, however, expect data impact to stay very much in second place in terms of market impact.

What does it mean for the Asian Session?

Based on recent strong labour market data, the AUD performed better than other major currencies as expected.

On the data front, the most recent Tertiary Industrial Activity report from Japan shows a 0.9% gain, above the 0.5% projection and the -0.4% contraction from the previous month. A higher Yen may result from this favourable conclusion as investor confidence in the Japanese economy rises. It also signals a more robust service sector.

How does it affect the US and European Sessions?

Prior to the US Preliminary UoM Consumer Sentiment, attention will likely be drawn to inflation-related data from Europe and the UK. Even if they appear to be abating, worries over the US and European financial crises could dominate the economic data if more banks come forward and admit their problems.

Gold (XAU)

Key news events today

No major news events.

What can we expect from gold today?

The hawkish ECB and combined efforts to prevent a banking crisis from spreading may reduce safe-haven demand for the non-interest-bearing metal.

Next 24 Hours Bias

Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

The infusion of liquidity by the US and European central banks and major US banks to stem the liquidity crisis will likely provide stability to the banking sector and ease concerns over a potential mass banking crisis. This could help reduce uncertainty and volatility in the oil market.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

Eurozone’s Final CPI y/y is expected to decrease from 8.6% to 8.5%, while the Final Core CPI y/y is expected to remain the same at 5.6%. Should the data set come in lower than expected, the recent hawkish seen in the ECB may be mildly tamed.

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

Weak Bullish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

Japan’s Tertiary Industry Activity m/m is expected to rise by 0.5% (prev. -0.4%). This could positively impact JPY due to its significant contribution to the Japanese GDP (approx. 70%) and suggest overall economic expansion.

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 Bullish

Global Markets:

Asian Stock Markets: Nikkei up 1.20%, Shanghai Composite up 0.72%, Hang Seng up 1.64%, ASX down 1.46%

European equities, the DAX futures up 0.87%, CAC 40 up 0.71%, FTSE up 1.09%.

US Stock Market: Dow jones up 1.17%, S&P 500 up at 1.76%, Nasdaq 100 up at 2.48%.                    

Commodities: Gold at $1931.52 (0.53%), Silver at $21.85 (+0.66%), Brent Oil at $75.23 (+0.71%), WTI Oil at $68.95 (+0.88%)

News & Data:

• (USD) Industrial production (MoM) (Feb) Forecast 0.2%, Previous 0.0% at 18:45
• (USD) Industrial production (YoY) (Feb) Forecast 3.00%, Previous 0.79% at 18:45
• (EUR) CPI (YoY) (Feb) Forecast 8.5%, Previous 8.6% at 02:30
• (EUR) Core CPI (YoY) (Feb) Forecast 5.6%, Previous 5.3% at 02:30
• (RUB) Interest Rate Decision (Mar) Forecast 7.50%, Previous 7.50% at 03:00

Technical Outlook

GBPUSD

GBP/USD Remains Under Bearish Pressure

With price trading beneath a significant descending trend line, the GBP/USD chart is currently displaying bearish momentum. This signals that there may be short-term negative pressure on the currency pair.

If the price rose, it can have a bearish reaction, break through the first resistance level, and fall to the first support. The 1.1927 level, a strong overlap support, is the first support level. A notable level to watch is the intermediate support level at 1.2010, which is both a swing low support and a 50% Fibonacci retracement.

EURUSD

GBP/USD Remains Under Bearish Pressure

Before the bearish trend resumes, the EUR/USD could experience a brief rise.

The EUR/USD exchange rate is currently trading below the Ichi Moku cloud, indicating a bearish overall momentum. The price is also moving inside of a negative channel, which shows that the bearish momentum may persist.

But soon, it’s possible that the price will increase towards the first barrier of resistance at 1.0678 before turning around and falling to the first barrier of support at 1.0534.

The first support level is a powerful level of support since it is a multi-swing low support. Its strength is increased by the fact that the second support level is a swing low support. Currently, the /USD chart displays bearish.

AUDUSD

The bullish momentum may be seen on the AUD/USD chart. A positive sign has been created by the price crossing over the Ichi Moku cloud and breaking above a descending resistance line.

A positive breakthrough of the first obstacle at 0.6695 and a rally towards the second resistance at 0.6779 are possible price developments for the AUD/USD currency pair. The first support, a multiple-swing low support, is located at 0.6565.

The 38.2% Fibonacci retracement and the first resistance level at 0.6695 make this level notable. The second resistance level at 0.6779, which is also an overlap resistance level, might be reached if the price breaks above this barrier.

USDJPY

With the price trading beneath significant resistance points and the Ichi Moku cloud, the USD/JPY chart is currently displaying a bearish momentum. This indicates that the pair might continue to decline soon.

The first support level, which is an overlap support and may produce a bounce if price drops to it, is at 132.6000 when looking at the support and resistance levels. If the price were to keep falling, the second support level, around 130.5800, which is also an overlap support, would offer additional support.

The first resistance level, on the other hand, is located at 135.1800 and is an overlap resistance level that price must surpass to signal a potential bullish reversal. The price would need to gain significant momentum to break above the second resistance level, which is located at 137.02 and is a multi-swing high resistance level.

DAX 40

Bullish momentum is currently visible on the GER30 chart, and price action may move forward towards the first resistance level. The fact that the price is currently above the Ichi Moku cloud and a declining resistance line lends credence to this.

If the bullish trend persists, the initial resistance around 15238, which also happens to be a 50% Fibonacci retracement, is an important milestone to keep an eye on. If this level is broken, more bullish acceleration towards the overlap resistance at 15481, which corresponds with a 78.60% Fibonacci retracement, may follow.

On the downside, the price had already bounced off the initial support at 14890, which is a strong overlap support. Price might drop to the second support at 14677, which is also an overlap support, if it were to break this support.

WTI CRUDE OIL

The momentum is unfavourable on the WTI chart. The fact that the price is currently contained under the bearish Ichi Moku cloud, indicating that there is bearish resistance in place, supports this.

With the prospective price action, it is possible that price may respond negatively and fall away from the first resistance level towards the first support level. The initial support level, a multi-swing low support level, is at 66.34. The second support level, a swing-low support level, is located at 62.29.

The overlap resistance level at 69.39, which also serves as the 23.60% Fibonacci retracement level, is the initial resistance level on the upswing. At 70.36, there is a second resistance level that overlaps the first one.

GOLD

Right now, XAU/USD is bullish. A bullish continuation of the price towards the first resistance level is indicated by the chart analysis. The first support level is located at 1913, which is the 23.60% Fibonacci retracement level and is seen as an overlap support. The 38.20% Fibonacci retracement level and overlap support level for the second support level are both in 1889, which is also a support level. The first resistance level, which is thought to be a multi-swing high resistance, is located at 1937, on the other hand. 1959 is the second resistance level, which is a swing high resistance.

BITCOIN

With a high degree of confidence in further higher possibilities, Bitcoin (BTC/USD) is still showing strong bullish momentum. The price is moving up steadily and the chart’s overall momentum is optimistic.

Price can move in a positive direction in the direction of the first resistance level at 26522 and possibly in the direction of the second resistance level at 28105.

The first support level, which is also a 23.60% Fibonacci retracement, is located at 25008 and is an overlap support level. The second support level is located at 23720 and is a 38.20% Fibonacci retracement as well as an overlap support level.

The fact that Bitcoin is a very volatile asset with unpredictable price changes must be noted. For those who are positive on the cryptocurrency, however, the strong bullish momentum and great confidence in future upward possibilities make it a promising investment prospect.