. Fundamental Analysis Report With Charting Trends- 17-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 17 MAY 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 17 MAY 2023

17 May 2023

FUNDAMENTAL REPORT FORECAST

MARKET UPDATE:

Wall Street falls as US retail sales, Home Depot outlook

U.S. stock indexes ended lower on Tuesday due to a disappointing Home Depot estimate, weaker consumer spending indicated by April retail sales data, and general market angst over interest rate and debt ceiling negotiations.

The Commerce Department stated that retail sales increased 0.4% in April, falling short of the forecasted 0.8% growth. However, core retail sales, which excludes purchases of cars, petrol, building supplies and food services, increased.

There is a sense that people are starting to become a little more sensitive to the Fed’s accomplishments, and the prolonged drama surrounding the debt ceiling is upsetting people.

FX Traders Getting Ready for Some Major Moves

For a few weeks now, the majority of the major FX pairs have been trading in well-known ranges, and seasoned campaigners are getting ready for a rise in volatility. Most traders have had success with fading ranges recently as interest rate differential expectations have moved in lockstep across jurisdictions, but some pairs now appear to be ready for significant movements. The current US debt ceiling debate is at the top of the list of potential triggers, albeit it can be challenging to pinpoint exactly what could be the reason for some movements. 

What happened in the Asian Session?

Wages and salaries increased by 0.8% in Australia, which was somewhat less than the 0.9% predicted by the WPI q/q data. The AUD may be affected somewhat negatively by this, signalling steady but slower growth than anticipated. 

In line with market forecasts, the Japanese Preliminary GDP Price Index y/y held steady at 2.0%. With an increase of 0.4% as opposed to the anticipated 0.2%, the preliminary GDP for the quarter beat predictions. Additionally, the Revised Industrial Production m/m increased by 1.1%, exceeding the previously reported 0.8% and expected 0.8% growth rates. These encouraging numbers point to a strong Japanese economy, possibly supporting the JPY.

What does it mean for Europe & US Session?

Given that there are expected to be little differences between the next data releases and the previous ones, the USD may continue to consolidate in the sessions to come. During BoE Governor Bailey’s speech and the significantly higher-than-expected Canadian Foreign Securities Purchases, respectively, the Cable and the Lonnie may experience greater volatility.

The Australian Dollar (AUD)

Key news events today

Monetary Policy Meeting Minutes

What can we expect from AUD today?

The Australian Wage Price Index Q/Q data that will soon be released is anticipated to have a favourable effect on the currency. The data indicates an improvement in wage growth in the Australian economy, with an anticipated growth of 0.9% over the 0.8% of the prior quarter. This might encourage economic expansion and fuel fears about inflation, leading to a continuation of hawkish monetary policy measures.

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 Pound (GBP)

Key news events today

No major news events.

What can we expect from GBP today?

Andrew Bailey, governor of the Bank of England, will deliver a speech in London at the British Chambers of Commerce Global Annual Conference. Depending on whether he suggests a hawkish or dovish position on monetary policy, his speech could have a substantial impact on the GBP. A dovish prognosis, suggesting ongoing loose policy, might depreciate the GBP, while a hawkish outlook, suggesting probable policy tightening, could strengthen it.  

Central Bank Notes:

  • The MPC of the BoE voted 7-2 to increase Bank Rate by 0.25 percentage points to 4.5%.
  • The updated projections show that CPI inflation is expected to decline slightly above 1% at the two and three-year horizons, below the 2% target.
  • CPI increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
  • Next meeting on 22 June 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?

Preliminary GDP Price Index y/y with a predicted value of 2.0% (previous: 1.2%), Preliminary GDP q/q with a predicted value of 0.2% (previous: 0.0%), and Revised Industrial Production m/m with both predicted and past deals at 0.8% are the forthcoming data releases for the JPY. While negative developments could weaken the JPY, positive surprises could support it.

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

Mixed

Global Markets:

Asian Stock Markets: Nikkei is up 0.84%, Shanghai Composite is down 0.21%, Hang Seng is down 2.09%, ASX is down 0.49%

European equities, the DAX futures up 0.26%, CAC 40 down 0.12%, and FTSE up 0.07%.

US Stock Market: Dow Jones is down 1.01%, S&P 500 is down at 0.64%, and Nasdaq 100 is down at 0.18%.   

Commodities: Gold at $1984.65 (-0.18%), Silver at $23.64 (0.33%), Brent Oil at $75.06 (+0.20%), WTI Oil at $70.95 (+0.13%)

News & Data

  • (JPY) GDP (QoQ) (Q1) Actual 0.4%, Forecast 0.1%, Previous 0.0% at 05:20
  • (EUR) CPI (YoY) (Apr) Actual 7.0%, Forecast 7.0%, Previous 6.9% at 14:30
  • (GBP) BoE Gov Bailey Speaks at 15:00
  • (USD) Building Permits (Apr) Forecast 1.437M, Previous 1.430M at 18:00
  • (USD) Crude Oil Inventories Forecast –0.920M, Previous 2.951M at 20:00

Technical Outlook

GBPUSD

The GBP/USD is now showing a bearish momentum. A large declining trend line is below the price, which suggests that bearish momentum may be on the horizon.

At 1.2446, our first support is solidly in place. As a multi-swing low support, this level indicates that it has previously served as a point of rebound on numerous occasions. Our second support, at 1.2392, is another multi-swing low support level that might serve as a strong barrier for the bears in the case of a stronger bearish push.

If the GBP/USD tries to recover, however, it will run into our first barrier at 1.2536. As a multi-swing high barrier and a 38.2% Fibonacci retracement, this resistance points to a potential obstacle for the bulls.

The GBP/USD might possibly advance towards our second resistance around 1.2575 should there be a more pronounced positive reversal. 

EURUSD

We are now observing a bearish momentum for the EUR/USD. The price is noticeably below a significant downward trend line, indicating that more bearish momentum may be on the horizon.

The first support is currently at 1.0846. This level serves as a multi-swing low support and frequently signals a strong bearish defensive line. If the price falls further, our second support, which is located around 1.0792, is a swing low support point, indicating that the price has previously found support there.

On the other hand, if the EUR/USD makes an effort to rally, it will run into our first barrier at 1.0909. Indicating a potentially difficult barrier for the bulls, this level represents overlap resistance and lines up with a 23.6% Fibonacci retracement.

The EUR/USD may move up towards our second resistance at 1.0942 in the case of a more robust positive reversal. Another overlap resistance level, this one also lines up with a 38.2% Fibonacci retracement, which can strengthen the resistance level.

AUDUSD

Given this situation, a bearish break off the first support could cause the price to fall towards the second support.

Our first support is firmly in place at 0.6635. This level is an overlap support that lines up with a 78.6% Fibonacci retracement, indicating it will be a crucial point in how the price reacts. If the price were to drop below this mark, our second support would be at 0.6582.

On the other hand, if the AUD/USD rose, it would run into our first resistance at 0.6707. Given that it coincides with a 38.2% Fibonacci retracement and is a multi-swing high resistance level, the bulls may face difficulty at this level.

 The AUD/USD might potentially soar towards our second resistance at 0.6751 should there be a significant bullish reversal. A swing high resistance level, this level also corresponds to a 61.8% Fibonacci retracement.

USDJPY

Currently, the USD/JPY is moving up in a bullish manner. Given that the price is above a strong ascending trend line, additional positive momentum may be in the works.

At 135.20, our first support is solidly in place. As a pullback support level that coincides with a 50% Fibonacci retracement, this level is significant for price reaction. We have intermediate support between the current price and our first support at 136.05, which is pullback support that coincides with a 23.6% Fibonacci retracement.

On the other hand, if the USD/JPY moves in a bullish direction, it will run into our first barrier at 137.75. This resistance, which has many swing highs, indicates a potential obstacle for the bulls. The price may encounter an intermediate resistance at 136.80, which is a swing-high resistance and lines up with a 78.6% Fibonacci retracement before it reaches the first resistance.

DAX 40

The German DAX index, or GER30, is showing a bullish trend now. The price is above a significant ascending trend line, indicating that more bullish momentum is on the horizon, which supports the upward momentum.

The first line of support in the case of a market correction is located at 15700.02. As a consistent overlap support, this level offers a strong underpinning for prospective price recovery.

An intermediate support level is found around 15746.62, which is closer to the current price movement. Previously serving as a swing low support, this level offers further defence against bearish oscillations.

On the other hand, traders should be on the lookout for the first resistance level around 15972.4 if the bullish trend continues. This enormous resistance with several swings can obstruct further ascent.

The second resistance at 16115.0 is the next level to be on the lookout for if the market can get above this initial barrier. The next obstacle for the bullish trend might be this swing high resistance.

WTI CRUDE OIL

The price of the WTI instrument is currently below a significant declining trend line, which indicates a bearish momentum.

69.35 is the first point of contact with WTI. A 61.80% Fibonacci projection level and the overlap support level are both supporting this level. This can provide a solid defence against additional bearish movements.

At 67.70, the second support level can be identified. This multi-swing low support level provides an extra measure of defence against a future price decline.

The initial resistance level on the upward is marked at 71.67. This overlap resistance could be a substantial obstacle for any bullish attempts since it coincides with a 50% Fibonacci retracement level.

 The second resistance level is set at 73.60 above that. This level, which also serves as an overlap resistance, could make upward movements more difficult.

GOLD

Given that the price is below a significant declining trend line, the XAU/USD pair is currently exhibiting negative momentum.

1975.26 is where the initial line of XAU/USD support is situated. This point is serving as a multiple swing low support and may provide a solid barrier to additional bearish swings.

At 1950.23, the second support level can be discovered. As a multi-swing low support level, this level adds another layer of resistance against prospective price declines.

The first resistance level is placed at 2007.23 for the upside. This pullback barrier may prove to be a formidable obstacle for any bullish efforts.

The second resistance level is established at 2023.91 above that point. As an overlap resistance, this level can make upward advances more difficult.

 At 1986.03, there is a middle resistance level between these levels. This position, which serves as a support for swing lows, is also in line with the Fibonacci projection of 78.60%, which can create some market reactions.

LITECOIN

The LTC/US Dollar exchange rate’s overall trend is currently bullish, indicating that the upside towards the first resistance level is likely to continue.

The 61.80% Fibonacci retracement level and a pullback support are located around 88.68, which is the initial level of support.

A further decline might approach the second support, represented by a prior swing low, at 84.16. In this area, the market has previously seen sufficient buying pressure to halt a falling trend and start an upward movement. As a result, it can present a difficult obstacle for the bears.

The initial obstacle on the upswing is situated at 93.19, which is a crossover resistance and coincides with the 78.60% Fibonacci retracement. This level represents a prior price region where selling pressure prevailed over buying pressure, therefore it might prevent any bullish attempts.

Further on, the second resistance is situated at 97.20, This is also an overlap resistance and denotes a price zone that has previously served as both support and resistance.