25 May

Fundamental Analysis Report With Charting Trends- 25-May-2023

/ CSFX Analytics

FUNDAMENTAL REPORT FORECAST

MARKET UPDATE:

Market Concerns Regarding the Debt Ceiling Persist

Yesterday’s trading day saw a further decline in the value of international markets as worries about the US government debt crisis grew. The rating company Fitch issued a warning to the US government, stating that it had downgraded the states and put them on “Watch Negative” due to the likelihood of a default. Yesterday, the Dow, S&P, and Nasdaq all had declines of 0.77%, 0.73%, and 0.61%, respectively, across all major US indices. After the RBNZ hiked interest rates one last time and indicated that it was finished for now, the dollar continued to gain on its safe-haven basis, with the Kiwi suffering a substantial loss. The yield on US Treasury bonds that are slated to mature on June 1 (the default X date) increased by over 7%.

Day of Silence Before the US Session

As we once again look to the US for new insight in the global economic story, traders are getting ready for a relatively calm day ahead in the Asian and European sessions. There isn’t much on the calendar for either of the first two sessions to change that feeling, but markets are expected to open well on the back foot following another difficult US session and further anxiety regarding the US debt position. Once the US session starts, investors’ attention will turn to the debt issue, but there is also the minor matter of the most recent US GDP statistics to be released along with the weekly unemployment claims data.

What happened in the Asian Session?

As anticipated, the USD/JPY tried to increase to 140.00. The lack of data releases for the session caused the dollar to largely consolidate, though.

What does it mean for Europe & US Session?

Before there is any chance of a pullback, the US dollar is likely to pursue a resistance confluence around 104.30. Otherwise, bad US data releases could cause a decline towards 103.000 to occur sooner.

The Dollar Index (DXY)

Key news events today

Prelim GDP q/q

Unemployment Claims

What can we expect from DXY today?

Preliminary GDP q/q is one of the next data releases for the USD and is anticipated to show a growth rate of 1.1%. This suggests a healthy economic recovery and could cause the USD to appreciate. However, the jobless Claims data indicates a rise in jobless files, with the prior figure at 242K and a likely increase to 249K, which might have a negative effect on the USD.

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 Japanese Yen (JPY)

Key news events today

Tokyo Core CPI y/y

What can we expect from JPY today?

The Tokyo Core CPI y/y, with a predicted value of 3.4% (previous: 3.5%), and the SPPI y/y, with a predicted value of 1.4% (previous: 1.6%), are two upcoming data releases for the Japanese yen. These metrics shed light on Japan’s inflationary patterns. The JPY may benefit if CPI and SPPI numbers are higher than anticipated since they may signal impending inflationary pressures. In contrast, lower-than-expected results can damage the JPY.

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

The Euro (EUR)

Key news events today

German Ifo Business Climate

What can we expect from EUR today?

The Final German GDP q/q, which is likely to stay at 0.0%, and the German GfK Consumer Climate, which is anticipated to improve from -25.7 to -23.6, are among the forthcoming data releases for the EUR. The German GDP figures could be neutral for the EUR if they match the forecast. The EUR may gain strength if the German GfK Consumer Climate report came back favourably, signalling an increase in consumer optimism and prospects for economic growth. A poor outcome, on the other hand, might make the currency weaker. However, volatility could result from any large departures from the predictions.

Central Bank Notes:

The ECB has decided to raise the three key interest rates by 25 basis points as the inflation outlook continues to be too high for too long.
The ECB will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction.
Renewed financial market tensions and Russia’s war against Ukraine remain significant economic downside risks.
The continued resilience of the labour market could lead to higher growth than anticipated.
Next meeting on 15 June 2023

Next 24 Hours Bias

Weak bullish

Global Markets:

Asian Stock Markets: Nikkei up 0.39%, Shanghai Composite down 0.49%, Hang Seng down 2.17%, ASX down 1.05%

European equities, the DAX futures down 1.92%, CAC 40 down 1.70%, FTSE down 1.75%.

US Stock Market: Dow jones down 0.77%, S&P 500 down at 0.73%, Nasdaq 100 down at 0.61%.

Commodities: Gold at $1960.21 (+0.16%), Silver at $23.07 (+0.12%), Brent Oil at $78.20 (-0.20%), WTI Oil at $74.09 (-0.32%)

News & Data

(EUR) German GDP (QoQ) (Q1) Actual –0.3%, Forecast –0.1%, Previous –0.4% at 11:30
(USD) GDP (QoQ) (Q1) Forecast 1.1%, Previous 2.6% at 18:00
(USD) Initial Jobless Claims Forecast 250K, Previous 242K at 18:00
(USD) Pending Home Sales (MoM) (Apr) Forecast 0.5%, Previous –5.2% at 19:30
(CAD) Manufacturing Sales (MoM) Previous 0.7% at 18:00

Technical Outlook

GBPUSD

The GBP/USD pair is currently trading at 1.2434, down 0.20% on the day. The pair is trading below the 200-day moving average, which is a bearish signal.

The RSI is also in oversold territory, which suggests that the pair may be due for a rebound. However, the MACD is still in a bearish trend, which suggests that the overall trend is still to the downside.

The following are some of the key technical levels to watch for: Support: 1.2400, Resistance: 1.2500

If the pair breaks below 1.2400, it could target the next support level at 1.2300. If the pair breaks above 1.2500, it could target the next resistance level at 1.2600.

Overall, the technical outlook for the GBP/USD pair is bearish in the near term. However, there are some technical indicators that are signalling a potential rebound. Traders should be prepared for a volatile market in the near term.

EURUSD

The EUR/USD pair is currently trading at 1.0753, down 0.20% on the day. The pair is trading below the 200-day moving average, which is a bearish signal.

The following are some of the key technical levels to watch for: Support: 1.0700, Resistance: 1.0800

If the pair breaks below 1.0700, it could target the next support level at 1.0600. If the pair breaks above 1.0800, it could target the next resistance level at 1.0900.

Overall, the technical outlook for the EUR/USD pair is bearish in the near term. However, the pair could rebound if it finds support at 1.0700.

AUDUSD

The present negative trend on the AUD/USD chart suggests that further downward movement is likely.

There is possibility for a negative continuation in the near term approaching the first support level at 0.6508. This level of support is designated as a pullback support and falls within a 127.20% Fibonacci extension, pointing to its potential as a price floor.

A second support level, or overlap support, is also present at 0.6403. This level forms another potential base in the event of a negative price movement because it coincides with a Fibonacci extension of 161.80%.

The price may run into opposition at 0.6578, which is designated as a multi-swing high resistance, if it tries to buck the negative trend. A price movement upward could potentially be stopped at this level.

A second resistance level, known as a pullback resistance, is located at 0.6608. Should the trend change, this level might further hinder an upward price movement.

USDJPY

There is currently evidence of a negative trend on the USD/JPY chart, suggesting potential for further decline.

There is a chance for a short-term bearish reaction off the first resistance level at 139.40, which would then cause a decline towards the first support level at 137.75. The initial resistance level, which also happens to be a 50% Fibonacci retracement, is regarded as a multi-swing high resistance, highlighting its significance as a potential price ceiling.

A second resistance level known as a pullback resistance is also present at 0.91. A price movement upward could be further stopped at this level.

In terms of support, the overlap support at the initial support level of 137.75 may serve as a strong foundation to halt additional price declines.

Additionally, there is a second support level at 136.26 that is also known as an overlap support, increasing the likelihood of support in the event of a price decrease.

Additionally, there is a pullback support level at an intermediate support level of 138.79, offering yet another potential base to halt price declines. A reversal may be imminent given that the Relative Strength Index (RSI) is also exhibiting negative divergence vs price.

DOW JONES

Right now, the DJ30 index is moving in a bearish direction. The price may continue its downward trend in direction of the first support level, according to expectations.

The first support level, which is located around 33009.96 and acts as a pullback support, may offer a strong base to halt or stop future price losses.

At 32424.42, there is a second support level that is marked as an overlap support, increasing its potential to act as a stopgap against further price declines.

On the other hand, if the price makes an effort to break its downward trend, it will run into the first resistance at 33434.47, which serves as a pullback resistance. A price increase could potentially be stopped by this.

At 33844.35, the second resistance level acts as overlap resistance. If the price reaches this point, it might be difficult for it to continue moving upward and might instead start to descend back towards its support levels.

WTI CRUDE OIL

The price of the WIT instrument is currently above a substantial ascending trend line, which signals the potential of ongoing positive momentum. This is mostly responsible for the instrument’s bullish trend.

The first level of support, known as an overlap support, is located at 69.73. This suggests that the price has historically bottomed out at this position, indicating that it may be able to halt additional price falls.

The ability to stop additional price declines is further strengthened by the fact that the second support level, which is situated at 66.55, is also acknowledged as an overlap support.

However, if the price tries to maintain its upward trajectory, it can run against resistance at 73.79. This overlap resistance level, which is also at the 61.80% Fibonacci retracement level, may prevent price increases.

The second resistance level, which is located at 76.69 and is known as overlap resistance, may serve as a ceiling for future price increases.

SILVER

The price of the silver is currently showing a neutral trend, which indicates that it may move between levels.

The initial support level, which is designated as a multi-swing low support, is situated at 23.08. This indicates that the price has previously achieved a low point at this location, possibly acting as a strong barrier to additional price declines.

The price has historically bottomed out at 22.11, which is where the second support level is located. As a result, it may prevent additional price decreases. This level is known as an overlap support.

On the other hand, if the price attempts to rise, it can run into resistance at 23.82. The fact that the price has already peaked at this level, which is known as a multi-swing high resistance, suggests that it may potentially hinder higher price moves.

The following resistance level, also referred to as a pullback resistance, is at 24.45 This amount could serve as the cap for any price increases.

ETHEREUM

The price of the ETH/USD instrument has recently broken below an ascending support line, which suggests the possibility of future bearish moves. This bearish trend is mostly to blame.

The key support level, which is known as a multi-swing low support and where the price has previously made a low several times, is located at 1787.51. This might serve as a formidable barrier to further decreases.

At 1634.96 is where the second support level is situated. This level, which is known as an overlap support, might act as another floor to stem future price declines.

The 1879.96 first resistance level could prevent the price from climbing in the case of a probable price reversal. This overlap resistance level is a potential ceiling that can stop the progress of any bulls.

At 1990.90, there is a second resistance level that is also referred to as an overlap resistance. This strengthens its capacity to serve as a barrier against price increases because it is a location where the price has previously peaked.