. Fundamental Analysis Report With Charting Trends- 18-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 18-May-2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS- 18-May-2023

18 May 2023

FUNDAMENTAL REPORT FORECAST 

MARKET UPDATE:

Wall Street increases on hope for a debt ceiling and a boost in regional banks.

As hopes for an agreement on raising the $31.4 trillion federal debt ceiling increased and worries about a worsening of the sector’s problems were allayed by a comeback in regional bank shares, U.S. markets climbed significantly on Wednesday.

President Joe Biden and top Republican in Congress Kevin McCarthy emphasised on Wednesday their commitment to reaching a quick agreement to raise the debt ceiling and avert a devastating economic disaster.

“We are hopeful regarding the debt ceiling. It is persistent hope that the banking crisis is behind us. The longer we go without a new issue, the closer we may be to putting it behind us, according to Cherry Lane Investments partner Rick Meckler of New Vernon, New Jersey.

Recent figures show that the U.S. economy is slowing down after the Fed raised interest rates several times to combat excessive inflation. This has drawn attention to the question of whether the central bank would stop raising or lower interest rates, along with recent discussions over the U.S. debt ceiling.

What happened in the Asian Session?

Potential employment losses are indicated by the Australian Employment Change data, which are -4.3K (less than the predicted 24.8K and the prior 61.1K). The real unemployment rate, which is 3.7%, is higher than expected and earlier estimates, which were 3.5%. These bad signs point to a contracting labour market, which could cause the AUD to depreciate.

What does it mean for Europe & US Session?

The Cable may drop to retest the recent lows of about 1.2420 if the BoE is judged to be dovish at the next Monetary Policy Report Hearings. Otherwise, another push-up to the most recent highs of roughly 1.2540 could occur if 1.2500 is broken.

Before BoC Governor Macklin’s press address regarding the Financial System Review, the Lonnie Willy is likely to stay in a sideways range between 1.3400 and 1.3530.

The Dollar Index (DXY)

Key news events today

Unemployment Claims

What can we expect from DXY today?

US Unemployment Claims are expected to be 253K (down from 264K), the Philly Fed Manufacturing Index is expected to be -19.5 (down from -31.3), and existing home sales are expected to be 4.30M (up from 4.44M). While negative numbers could lower the USD, positive surprises in the statistics could enhance it.

Central Bank Notes:

  • The committee raised the target range for the federal funds rate to 5 to 5-1/4 per cent. The U.S. banking system is sound and resilient.
  • Tighter credit conditions for households and businesses may weigh on economic activity, hiring, and inflation.
  • The committee is committed to returning inflation to its 2% objective
  • The committee will adjust monetary policy as appropriate if risks emerge that could impede the attainment of goals
  • Next meeting is on 14 June 2023

Next 24 Hours Bias

Mixed

The Australian Dollar (AUD)

Key news events today

Employment Change

Unemployment Rate

What can we expect from AUD today?

The upcoming data releases on Australia’s employment change are anticipated to have a mild influence on the AUD, with a forecasted figure of 24.8K (previous: 53.0K) and the unemployment rate remaining unchanged at 3.5% (previous: 3.5%). Based on the employment change number, the state of the job market and the economy will be evaluated. The AUD may benefit if the release beats forecasts and shows a more active labour market. In contrast, the currency may suffer if expectations aren’t met.  

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

Annual Budget Release

What can we expect from NZD today?

The PPI Input q/q is projected to increase by 0.5% (prior quarter: 0.5%), and the PPI Output q/q is anticipated to increase by 0.8% (previous quarter: 0.9%), according to the impending statistics from the New Zealand dollar. These numbers point to stability and a promising future for the economy. Additionally, information about the government’s spending priorities and fiscal policies will be included in the annual budget release.  

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

Weak bullish

Global Markets:

Asian Stock Markets: Nikkei up 1.60%, Shanghai Composite down 0.40%, Hang Seng up 0.85%, ASX up 0.52%

European equities, the DAX futures up 1.41%, CAC 40 up 0.80%, FTSE up 0.56%.

US Stock Market: Dow jones up 1.24%, S&P 500 up at 1.19%, Nasdaq 100 up at 1.28%.   

Commodities: Gold at $1975.61 (-0.29%), Silver at $23.45 (-1.14%), Brent Oil at $76.50 (-0.56%), WTI Oil at $72.39 (-0.62%)

News & Data

  • (AUD) Employment Change (Apr) Actual –4.3k, Forecast 25.0K, Previous 53.0K at 07:00
  • (AUD) Annual Budget Release at 7:30
  • (EUR) ECB President Lagarde Speaks at 14:30
  • (USD) Initial Jobless Claims Forecast 254K, Previous 264K at 18:00
  • (USD) Existing Home Sales (Apr) Forecast 4.30M, Previous 4.44M at 19:30

Technical Outlook

GBPUSD

Bullish momentum is currently seen on the GBP/USD chart, suggesting potential for additional upward action.

There is a chance of a bullish continuation in the near term approaching the first resistance level at 1.2534.

The second support level of 1.2574, which is seen as a pullback resistance and coincides with a 61.80% Fibonacci retracement, offers additional support.

The first support level, known as a swing low support, is located at 1.2420 on the support side. Another support level, known as a multi-swing low support, is located at 1.2392.

The RSI indicator shows bullish divergence compared to the price, supporting the bullish position. This points to the potential of a big price increase.

EURUSD

Bullish momentum is currently seen on the EUR/USD chart, suggesting potential for more upward action.

There is a chance of a bullish continuation in the near term approaching the first resistance level at 1.0909.

To potentially serve as price floors, support levels are also present. The initial support level, known as a swing low support, is located at 1.0823. The second support level, often known as a swing low support, is located at 1.0788 as well.

Additionally, there is an overlap resistance level at the intermediate resistance level of 1.0846. This level’s relevance is increased by the fact that it coincides with a 38.20% Fibonacci retracement.

The positive divergence seen in the RSI indicator when compared to the price is another element bolstering the bullish case. This raises the possibility of a large price rise.

AUDUSD

Bullish momentum is currently seen on the AUD/USD chart, suggesting potential for more upward action.

According to this bullish momentum, a bullish continuation towards the first resistance level at 0.6707 is possible.

There are two levels of support for this prospective upward advance. The initial support level, known as an overlap support, is located at 0.6635.

The second level of support, known as a swing low support, is located at 0.6582. The general bullish inclination is strengthened by this level.

The initial resistance level on the resistance side is a multi-swing high resistance level and is located at 0.6707. The price may run into resistance at this level if it rises further.

A second resistance level known as a pullback resistance is also present at 0.6750.

USDJPY

The price is currently above a significant ascending trend line on the USD/JPY chart, indicating the possibility of more upward action.

There is a chance of a short-term decline towards the first support level at 136.25, followed by a bounce from that level and an increase towards the first resistance.

The first support level, which is marked as an overlap support and falls at 136.25, is significant as a potential price floor because it is accompanied by a 38.20% Fibonacci retracement.

The second support level at 135.20 can offer extra support if there is a further decline.

The initial resistance level, which is at 137.75, is an overlap resistance level.

Another resistance level, a swing high resistance, is located at 139.40. This level can represent a considerable price barrier.

DOW JONES

Bullish momentum is currently visible on the DJ30 (Dow Jones Industrial Average) chart, indicating the possibility of higher rise.

Regarding possible price movement, a bullish breakout of the first resistance level at 33463.75 is conceivable. A multi-swing high resistance level is what this level is known as. If this level is successfully broken, the price may move higher towards the second resistance level at 33654.05. This level features a high resistance with multiple swings.

On the support side, the initial support level, which is designated as a pullback support, is at 33156.34. If the price fell, this level might offer support. A second support level, known as a swing low support, is also present at 32951.40, offering further possible support for the price.

WTI CRUDE OIL

The price broke over a falling resistance line, initiating a probable positive rise, and the WTI chart is currently showing bullish momentum.

The price may decline further soon and reach the first support level at 71.72. This level is designated as a support for pullbacks.

At 69.38, there is an overlap support that serves as the second support level. If the price were to decline even further, this level might possibly offer support.

The first resistance level on the resistance side is at 73.57 and is known as an overlap resistance. This level might potentially serve as a price ceiling if the price were to increase.

Another overlap resistance level at 76.53, which also occurs to be a -27% Fibonacci expansion, marks the second resistance level.

SILVER

Given that the price is below a significant declining trend line, the silver chart is currently exhibiting negative momentum.

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

At 22.69, 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 24.16 for the upside. This pullback barrier may prove to be a formidable obstacle for any bullish efforts.

The second resistance level is established at 25.06 above that point. As an overlap resistance, this level can make upward advances more difficult.

BITCOIN

The current bearish momentum on the BTC/USD chart suggests a likely downward drop.

A bearish continuation towards the first support level at 26583 is conceivable in terms of market activity. The overlap support level at this point could serve as a price floor. The price may decline further towards the second support level around 25783, which is seen as a swing low support, if the negative momentum continues.

The initial resistance level, known as an overlap resistance, lies at 27651 on the resistance side. This level of resistance is notable since it falls between the range of a 61.80% Fibonacci projection and a 78.60% Fibonacci retracement. The second resistance level, which is likewise an overlap resistance, is located at 28291.

Overall, the BTC/USD chart’s momentum is bearish, and a bearish continuation in the direction of the first support level is possible.