. Fundamental Analysis Report With Charting Trends- 23 March 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 23 MARCH 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 23 MARCH 2023

23 Mar 2023

MARKET UPDATE:

Stocks fall over conflicting Fed messages

US stock markets ended the day in the red as erratic market movements were caused by the Fed’s conflicting messaging. As the markets processed the most recent FOMC announcement, the Dow dropped 1.63%, the S&P dropped 1.64%, and the Nasdaq dropped 1.6%. Before the dollar eventually settled slightly lower on the day in accordance with US treasury yields—the 2-year benchmark rate is presently at 3.95% compared to the previous day’s close of 4.17%—the currency markets suffered dramatic jumps. The session usually ends with commodities doing well as the dollar’s decline takes precedence.

Fed Increases by 25 bps before Hedging its Bets

The much-awaited Fed meeting is passed, but the market is still processing the 25-bps hike, statement, and press conference that followed. As anticipated, the Fed raised interest rates by 25 basis points, but more importantly, it removed the phrase “ongoing increases in rates will likely be appropriate” from its statement. The market reacted favourably to this, and risk trades exploded. Jerome Powell, however, soon changed from a dove to a hawk in the eyes of the market by saying at a later news conference that the Fed would take sufficient action to get inflation back to its 2% target and would raise rates if necessary. In essence, the Fed is currently waiting to see if there will be further market upheaval, which would cause them to adopt a more dovish position, or if the events of the last few weeks will turn out to be isolated episodes, in which case they would still be able to raise interest rates.

Additional Central Bank Activity Today

If the Swiss National Bank and Bank of England follow market expectations, traders will only have a few sessions to thoroughly process the FOMC’s most recent decisions before they are struck with additional central bank action and rate hikes. Investors will be attentively observing the effects of both central bank pronouncements even if the Fed vastly surpasses the SNB and the in terms of global market influence. Investors will be closely observing how both central bank pronouncements are received. The SNB following its intervention to save Credit Suisse just last week, and then the Bank of England following another positive CPI reading yesterday, with the y/y figure coming in at 10.4%, 0.5% higher than anticipated. The market has factored in a 25bps increase in the UK and a 50bps increase in Switzerland.

What happened in the US session?

At its meeting in March, the Fed raised its interest rate by 25 basis points, as anticipated. The FOMC’s announcement serves as a warning that the current tightening cycle is about to come to an end.

What does it mean for the Asian Session?

The USD will likely continue to see weakness as the Fed probably has one more hike of 25bps before the central bank pauses its tightening cycle. Moreover, the abating banking turmoil following the central banks’ coordinated efforts could reduce the safe-haven demand for the US dollar.

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

There is no significant AUD news today. CB Leading Index month-over-month shows a 0.0% change from the -0.1% of the preceding month. Lack of progress signals weak economic expansion, which could have a negative impact on the forecast for the AUD.

Central Bank Notes:

  • Cash rate raised by 25 basis points to 3.60%.
  • Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
  • Board to closely monitor the global economy, household spending trends, inflation and labour market outlook when assessing interest rate increases.
  • Next meeting on 4 April 2023

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

Since there isn’t any significant NZD-related news today, the price movement of the currency is expected to be influenced by the mixed data that was previously issued, including the GDT Price Index (-2.6%, previous -0.7%) and Westpac Consumer Sentiment. (77.7, last 75.6).  

Central Bank Notes:

  • Monetary Policy Committee increased the OCR from 4.25% to 4.75%
  • Higher interest rates are needed to reduce inflation and support employment sustainably
  • Severe storms in North Island will increase inflation and disrupt production.
  • Next meeting is on 5 April 2023

Next 24 Hours Bias

Mixed

The Swiss Franc (CHF)

Key news events today

SNB Monetary Policy Assessment

SNB Policy Rate

SNB Press Conference

What can we expect from CHF today?

It is projected that the policy rate would increase by 50 basis points to 1.50%. A hawkish tone in the Monetary Policy Assessment and Press Conference might help the CHF, whilst a dovish one might make it less valuable.

Central Bank Notes:

  • Current policy rate is at 1.00%
  • Next meeting on 23 March 2023

Next 24 Hours Bias

Mixed

The Pound (GBP)

Key news events today

MPC Official Bank Rate Votes

Monetary Policy Summary

Official Bank Rate

What can we expect from GBP today?

The BoE is expected to raise its official bank rate from 4% to 4.25%, and the MPC is expected to vote 7-0-2, which should have no effect on the pound. A dovish stance will result in decreased demand and value while an optimistic outlook will result in increased demand and value for the currency.  

Central Bank Notes:

  • MPC voted to increase Bank Rate by 0.5 percentage points to 4%
  • Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
  • MPC’s updated projections show CPI inflation falling back sharply from its current level
  • Next meeting on 23 March 2023 

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei down 0.17%, Shanghai Composite up 0.64%, Hang Seng up 2.34%, ASX up 0.87%

European equities, the DAX futures down 0.21%, CAC 40 down 0.25%, FTSE down 0.54%.

US Stock Market: Dow jones down 1.63%, S&P 500 down at 1.65%, Nasdaq 100 down at 1.60%.                    

Commodities: Gold at $1975.23 (0.28%), Silver at $22.82 (-0.49%), Brent Oil at $76.50 (-0.25%), WTI Oil at $70.65 (-0.35%)

News & Data:

  • (USD) Initial Jobless Claims Forecast 197K, Previous 192K at 18:00
  • (USD) New Home Sales (Feb) Forecast 650K, Previous 670K at 19:30
  • (GBP) BoE Interest Rate Decision (Mar) Forecast 4.25%, Previous 4.00% at 17:30
  • (CHF) SNB Interest Rate Decision (Q1) Actual 1.50%, Forecast 1.50%, Previous 1.00% at 14:00
  • (GBP) BoE MPC Meeting Minutes at 17:30

Technical Outlook

GBPUSD

The general momentum on the GBP/USD chart is bearish. Price could respond negatively and fall to the first support level after hitting the first resistance level. The first support level at 1.2194 is an overlap support and a strong support level because a 23.60% Fibonacci retracement lines up with it. The 38.20% Fibonacci retracement matching up with the second support level at 1.2045, which is also an overlap support, adds to the level’s strength.

On the resistance side, the first resistance level at 1.2287 is an overlap resistance and a strong resistance level because a 78.60% Fibonacci retracement lines up with it. The second resistance level, located at 1.2440, is a swing high resistance and is made even more powerful by the alignment of a 161.80% Fibonacci extension with it.

EURUSD

The EURUSD chart shows that the general momentum is bearish. However, soon, it’s possible that the price will initially decline toward the first support level at 1.077 before reversing off it and rising towards the first resistance level at 1.093.

Given that it is an overlap support, the first support level at 1.077 is a strong level of support. Another high degree of support is the second support level, which is located at 1.069 and is likewise an overlap support.

The first resistance level at 1.093, which is also an overlap level and corresponds with a 161.80% Fibonacci Extension, is a major level of resistance on the resistance side. If prices go past the first resistance level, the second resistance level at 1.103, which is a swing high resistance level, may offer more resistance.

Between the present price and the first support level, at 1.080, there is also a middle support level. A bigger negative acceleration toward our first support could start if price breaks through this intermediate support.

AUDUSD

Bullish momentum is present on the AUD/USD chart, suggesting that the price may rise further in the direction of the first resistance level. The initial level of support is at 0.6710, which also happens to be an overlap support and a 23.60% Fibonacci retracement. Price might move upward toward the first resistance level, which is a pullback barrier at 0.6789, if it were to bounce off this level.

A second support level, which is likewise an overlap support, is located at 0.6640. If the price were to fall below the initial support, this level might be able to offer additional support.

Overall, the chart’s positive momentum indicates that there is a greater likelihood that prices will keep climbing toward the first resistance level.

USDJPY

Overall bullish momentum can be seen on the USD/JPY chart, and a bullish bounce off the first support level in the direction of the first resistance is possible. The first support level, an overlap support level with a 78.60% Fibonacci retracement lining up with it, is situated at 130.39. The second support level, which is a multi-swing low support, is located at 128.10. The first resistance level, which is also an overlap resistance level, is located at 132.81 on the resistance side. At 134.55, there is a second resistance level that overlaps the first one.

The price activity around these levels should be monitored by traders since a move from the first support level to the first resistance level could present a bullish chance. A breach below the first support level, however, might indicate a possible shift in momentum in the direction of the bears.

DAX 40

The price of GER30 is currently above the Ichi Moku cloud and an ascending support line, indicating a positive momentum. A bullish extension towards the first resistance at 15249 is possible. The first support level, located at 15010, has a substantial overlap and a 23.60% Fibonacci retracement, which increases the level’s tensile strength. The intermediate support at 14717, which has previously served as a multi-swing low support level, is another support level to be on the lookout for.

First resistance level is a strong overlap resistance with a 61.80% Fibonacci retracement on the resistance side. The second resistance level at 15470, which is also an overlap resistance with a 78.60% Fibonacci retracement, might be reached if the price breaks out from this level. The price may run into an intermediate resistance level at 15174 on its ascent. The GER30 chart’s overall bias is positive, which implies that price may go upward from support to resistance.

WTI CRUDE OIL

The WTI chart’s overall momentum is bearish. The price may react negatively and fall from the first barrier to the first support. The first support level, which is an overlap support, is at 67.11 and is a good level. The second support level is a swing low support and is located at 64.36.

However, the initial resistance level, which is a pullback resistance level at 70.42, coincides with a 38.20% Fibonacci retracement. Price might move up toward the second resistance level at 73.46, which is a pullback resistance and corresponds with a 50% Fibonacci retracement, if it were to surge over this level.

It’s important to note that the chart’s present momentum is bearish; therefore, it is anticipated that the price will respond negatively off the first resistance level and decline in the direction of the first support level. However, a positive reversal in favour of the second barrier level may occur if the price were to break through the first resistance level.

SILVER

A positive recovery in silver may be supported by the initial support level at $22.24 and the initial resistance level at $22.97.  

The $21.66 level, which is an overlap support and corresponds with the 38.20% Fibonacci retracement, is a potential strong support level.  

Since the $23.61 level is also an overlap resistance, Silver may have issues if it reaches that point.  

At $24.50, a particularly high level of resistance is reached.

LITECOIN

The overlap support level at 86.26 acts as the initial support level and coincides with the 23.60% Fibonacci retracement on the LTC/USD chart, which has a bullish overall trend. The 38.20% Fibonacci retracement and the second level of support are both at 80.00, which is also a support level. 

However, the overlap resistance at the first resistance level, which is at 91.14, is situated. At 96.55, a swing high resistance, is the second resistance level. If price were to break through the first resistance level, it might rise toward the second level.