MARKET UPDATE:

Continued Volatility on the Stock Markets

As a result of the upheaval in the banking sector and central bank activity, the investor roller coaster persisted on Friday as global market indices remained volatile. At the end of another long week, the US market defied the trend by seeing all three major indices close higher: the Dow rose 0.41%, the S&P gained 0.56%, and the Nasdaq gained 0.3%. There was a sea of red on European and Asian stock exchanges. Fed speakers who all gave the market assurances about the soundness of the banking system supported US markets, and the dollar’s recovery from the post-Fed decline was continued. Treasury’s remained in their current levels, and gold concluded the day marginally lower.

Dollar in Favour: Friday’s gains were 0.5% higher

The dollar suffered a little last week as currency markets focused on the likely end of the FOMC’s rapid tightening cycle after the Federal Reserves raised expectations by 25 basis points. The dollar gained much of its lost territory versus the majors back during the last few trading days of the week, though. As central banks seek confidence in the wake of recent banking sector concerns, traders are currently searching for the next catalyst for currency changes. In terms of interest rate differentials, this appears to be a difficult call in the short term. Greater concerns have mainly overshadowed US statistics for the past few weeks, but at the end of last week we had two stronger prints: the weekly unemployment claims and the PMI numbers. If these readings continue to indicate to higher inflation in the US, anticipate the currency to increase.

This week’s market will be dominated by investor worries.

Apart from the German IFO Business Climate statistics today, there isn’t much scheduled to spook the scoreboard this coming week in terms of economic data releases. Investors will be able to assess the recent weeks’ extraordinary volatility and perhaps begin to anticipate the emergence of a clearer picture as a result. There are, of course, no assurances in this, and there is still a high likelihood of abrupt, aggressive changes, so as we move into what we hope will be slightly more favourable market conditions, traders should anticipate being heavily focused on the newswires.

What happened in the Asian session?

Japan’s SPPI y/y showed a value of 1.8%, which is higher than the prior value of 1.6% but is in line with expectations. This announcement could have a favourable effect on the JPY because it shows that the cost of services provided by Japanese businesses has gone up, thus increasing revenue for the country’s economy. Also, it can allude to pressures for inflation that would raise interest rates.

What does it mean for Europe & US Sessions?

With the imminent German IFO Business Climate data release and Governor Bailey’s speech at the London School of Economics, the price consolidations in the EUR and GBP that occurred during the Asian session are likely to come to an end. In the event of favourable results, the risk currencies may continue their recovery rallies in the direction of 1.0900 and 1.2300, respectively.

Gold (XAU)

Key news events today

No major news events.

What can we expect from gold today?

The Treasury Select Committee and LSE lectures by BOE Governor Bailey may have an impact on gold as speculators look for hints about future interest rates. It’s more likely that the BOE will maintain its current 25 bps policy given the UK CPI’s 10.4% (forecast: 9.9%) reading. More rate increases might reduce demand for gold, while signs of a pause might increase it.

Next 24 Hours Bias

Weak Bearish

Oil

Key news events today

No major news events.

What can we expect from Oil today?

For the second week in a row, US energy companies added four oil and petrol rigs, bringing the total to 758, an increase of 13% from the previous year.

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

No major news events.

What can we expect from EUR today?

The German Ifo Business Climate’s predicted data shows a small decline from the previous value of 91.1 to 91.0, indicating a marginally more negative view. If the predicted numbers come in as expected, the EUR may have a slight bearish reaction.

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 Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

It is anticipated that the JPY SPPI y/y statistics would show a growth of 1.8%, somewhat higher than the 1.6% that was recorded previously. This shows that Japan’s services sector has experienced some inflationary pressure. A higher-than-anticipated figure might support 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 27 April 2023 

Next 24 Hours Bias

Weak Bullish

Global Markets:

Asian Stock Markets: Nikkei up 0.33%, Shanghai Composite down 0.44%, Hang Seng down 1.75%, ASX up 0.10%

European equities, the DAX futures up 1.11%, CAC 40 up 0.92%, FTSE up 0.61%.

US Stock Market: Dow jones up 0.41%, S&P 500 up at 0.56%, Nasdaq 100 up at 0.31%.                    

Commodities: Gold at $1955.20 (-1.07%), Silver at $22.91 (-1.36%), Brent Oil at $75.11 (0.71%), WTI Oil at $69.77 (0.69%)

News & Data:

• (EUR) German IFO Business Climate Index (Mar) Actual 93.3, Forecast 91.0, Previous 91.1 at 13:30
• (USD) 2-year Note Auction Previous 4.673% at 22:30
• (GBP) BoE Gov Bailey Speaks at 22:30
• (EUR) German Business Expectations (Mar) Actual 91.2, Forecast 88.3, previous 88.5 at 13:30
• (EUR) ECB`s Elderson Speaks at 20:10

 Technical Outlook

GBPUSD

The general momentum of the GBP/USD chart is currently neutral, indicating that the price may move back and forth between the first resistance and first support levels.

The first support level is located at 1.1630 and is an overlap support that lines up with a 38.20% Fibonacci retracement. This level can serve as a significant region of buying interest. In addition, a pullback support level at 1.1826 is an intermediate support level that might be used if price were to decline from the current level.

On the resistance side, the first resistance level, which is a swing high resistance, is located at 1.2440. Price could experience selling pressure at this level if it were to rise from its current level. 1.2671 is the second resistance level, which is also an overlap resistance.

EURUSD

From the EUR/USD chart, it looks that overall momentum is bearish. As a result, price may continue to decline in a negative direction towards the first support level at 1.0478. This level is a strong level of support because it is an overlap support and a 38.20% Fibonacci retracement lines up with it. If this level were to be broken, the price might fall further lower towards the second support level at 1.0345. This level is also an overlap support and lines up with the 50% Fibonacci retracement.

The first resistance level on the resistance side is located at 1.1001. This level, which is a swing high resistance, may put severe selling pressure on the market. Also, there is an overlap resistance level and intermediate support level at 1.0764, which lines up with a 38.20% Fibonacci retracement. Price might move upward towards the first resistance level if it were to break through this one.

AUDUSD

The initial level of support is around 0.6554, which also happens to be a strong overlap support and a level of 61.80% Fibonacci retracement. This level has historically served as support, making it a viable candidate for a bounce.

The second support level, which coincides with a 78.60% Fibonacci retracement level and is an overlap support, is situated at 0.6389 and would be reached if the price fell further. This level has historically served as support, adding to its potential as a site for a bounce.

The first resistance level, which is an overlap resistance and falls at a 23.60% Fibonacci retracement level, is situated at 0.6702 if the price were to rise. Price movement might move towards the second resistance level at 0.6875 if it were to break through this level. This level coincides with a 50% Fibonacci retracement level and serves as overlap resistance.

USDJPY

Bullish momentum is currently seen on the USD/JPY chart, indicating that prices may soar much higher. A positive bounce off the first support level, which is an overlap support level at 131.2100 and lines up with a 61.80% Fibonacci retracement, might potentially occur in the price. The first resistance level at 139.4500, which is also an overlap resistance level and falls within a 50% Fibonacci retracement, might be reached if the market were to rebound from this level.

It’s important to keep in mind that the price may encounter the overlap resistance level at 137.8800 before moving into the first resistance level. On the support side, the price has historically rebounded off the second support level, which is located around 127.0800 and is a multi-swing low support level.

DOW JONES

The chart’s overall momentum is bullish, suggesting that the uptrend may continue. Price can break past the first obstacle in a positive manner, moving up towards the second resistance.

The first support level, an overlap level at 30295, may offer some price support if the price were to fall. The multi-swing low support level at 31762, which is also at the 50% Fibonacci retracement level, serves as the intermediate support level.

The initial resistance level, which overlaps with the 38.20% Fibonacci retracement level, is located at 32490. Price might move upward towards the second resistance level at 33534, which is also an overlap resistance level, if it were to overcome this obstacle.

It’s important to remember that before breaking out, the price may move back and forth between these levels. Nonetheless, the positive momentum shows that there is a greater likelihood of an upside breakout.

WTI CRUDE OIL

Currently, prices have a chance to respond negatively and fall from the first resistance level to the first support level. The initial support level is a swing low support at 64.22. 53.63 is another swing low support and the second level of support.

On the other hand, the initial resistance level, an overlap resistance, is at 70.41. The second resistance level, which is another overlap resistance, is located at 82.14.

It is significant to observe that the break below the ascending support line is what has caused the present negative momentum. This could result in a bearish move.

GOLD

The initial support level at 1948, which is an overlap support level, is currently displaying possibility for a continuation on the XAU/USD chart, which currently displays negative momentum. Prices might approach the second support level at 1881, which is also an overlap support level and corresponds with the 61.80% Fibonacci retracement level, if they continued to decline.

On the other hand, the first resistance level, which has a 127.20% Fibonacci extension, is at 2000, which is an overlap resistance level. A surge towards the second resistance level at 2070, a swing high resistance level, could result from breaking past this barrier.

It’s important to note that the recent bearish trend may lead to a further decline towards the first support level.

BITCOIN

Bitcoin’s chart versus the US dollar has been trending downward, with a likely decline to the first support level. The chart’s overall momentum is negative, which indicates that prices may drop more in the near term.

Right now, BTC/USD may experience a negative reaction and drop below the first resistance level to the first support. An overlap support level at 25232 serves as the first level of support. Prices might fall to the second support at 23941, another overlap support level, if they were to breach this support.

The initial resistance level, on the other hand, is at 28343, and it overlaps a resistance level with a 38.20% Fibonacci retracement. Prices might reach the second resistance level at 32842, which is a 50% Fibonacci retracement and an overlap resistance level, if they were to overcome this obstacle.