Fundamental Analysis Report With Charting Trends – 28 June 2023
28 Jun 2023
Nasdaq Surges 1.65% on Positive Data, Wall Street Rebounds
In today’s market update, we delve into the latest developments that have shaped the financial landscape. Following a few challenging days, the US stock markets experienced a notable rebound yesterday, driven by encouraging data and bolstered investor confidence. Notably, the Nasdaq emerged as the frontrunner with a significant surge of 1.65%, while the S&P and Dow also posted gains of 1.15% and 0.63% respectively. These positive market movements were fueled by robust figures on durable goods and consumer confidence, instilling hope for economic recovery.
Amidst this market resurgence, the focus now shifts to key factors that could influence global financial trends. Today, investors in the Asian market begin the day with optimism, hoping for the continuation of the positive momentum. Meanwhile, the European session is expected to be relatively calm, with limited data releases. However, the North American session holds more potential for significant market activity as the world’s prominent central bankers gather for the ECB event in Sintra. Volatility is anticipated as investors seek clearer signals on future interest rates.
In this report, we provide insights into the highlights of the Asia session, implications for the Europe and US sessions, and expectations surrounding major currencies. Additionally, we present an overview of global stock markets and commodity prices to provide a comprehensive understanding of the current financial landscape. Stay informed with the latest market news and data releases, enabling you to make well-informed investment decisions.
Data – Driven Rise
Data released overnight in the US has painted a positive picture of the economy, leading to a surge in Wall Street. After a few challenging days, the US stock markets experienced a respectable rebound yesterday, fuelled by solid figures on durable goods and consumer confidence. While the S&P and Dow followed suit with gains of 1.15% and 0.63% respectively, it was the Nasdaq that stole the show, emerging as the strongest performer with a 1.65% increase. This relief rally also caused the dollar to weaken, while the euro gained strength due to Christine Lagarde’s more assertive statements.
Inflation and Central Bankers in Focus
Investors in the Asian market are starting the day on a positive note, hopeful that the trend will continue. The release of important CPI inflation data in Australia this morning makes it a key focus for the APAC region. Meanwhile, the European session is expected to be relatively calm, with limited data releases. The North American session later in the day is anticipated to be more eventful as the world’s leading central bankers gather for the ECB event in Sintra. Volatility is expected as investors seek clearer signals on future interest rates.
Asia Session Highlights
The year-over-year CPI in Australia stood at 5.6%, falling short of the anticipated 6.1% and trailing behind the previous year’s figure of 6.8%. This sluggish inflation indicates the possibility of lower interest rates and softening measures from the Reserve Bank of Australia. Combined with unfavourable market sentiment, it could lead to a decline in the value of the Australian Dollar (AUD). These factors point to a slower-than-expected economic expansion, potentially resulting in decreased demand for the AUD.
Implications for Europe & US Session
Expect significant currency market volatility as central bank leaders make their remarks at the ECB event in Portugal. Traders will closely watch the statements made by Fed Chair Powell, as any significant remarks could push the DXY beyond its 30-pip range of 102.00 to 102.30. The targets for movement in either direction are 101.50 and 102.80, respectively.
The Dollar Index (DXY)
Key News Events Today
Fed Chair Powell Speaks
At the ECB Forum on Central Banking in Sintra, Jerome Powell, the chair of the Federal Reserve, is expected to participate in a “Policy Panel” discussion. Traders will scrutinize his remarks for hints regarding upcoming monetary policy decisions. A hawkish stance may strengthen the USD, while a dovish one could weaken it.
Central Bank Notes:
- The federal funds rate target range will be 5 to 5-1/4 percent.
- The Committee is strongly committed to returning inflation to its 2% target.
- The Committee will adjust monetary policy if risks emerge that could hinder achieving its goals.
- Various factors will be considered, including labor market conditions, inflation pressures, inflation expectations, and international and financial developments.
- The next meeting is scheduled for July 26, 2023.
Next 24 Hours Bias: Mixed
The Kiwi Dollar (NZD)
Key News Events Today
- No major news events.
With no significant news impacting the New Zealand Dollar today, upcoming data releases on Thursday are expected to have a greater influence on the currency’s value. The recent ANZ Business Confidence index revealed a negative outlook among enterprises, with a reading of -31.1. If this sentiment persists, the NZD may face downward pressure.
Central Bank Notes:
- The Monetary Policy Committee has raised the OCR from 5.25% to 5.50%.
- The Committee believes that maintaining interest rates at a restrictive level for some time will bring inflation back within the target range while supporting maximum sustainable employment.
- The Committee voted by a majority of five to two to increase the OCR by 25 basis points to 5.50%.
- Interest rates must remain restrictive to ensure inflation returns to the target range while supporting maximum sustainable employment.
- The next meeting is scheduled for July 12, 2023.
Next 24 Hours Bias: Weak Bearish
The Japanese Yen (JPY)
Key News Events Today
- No major news events.
Governor Ueda of the Bank of Japan is set to participate in a discussion on the “Policy Panel” at the ECB Forum on Central Banking in Sintra. Market participants eagerly await his comments, which may provide insights into the future course of the BOJ’s monetary policy.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%.
- The Bank of Japan has decided on the following measures:
- Yield curve control: Negative interest rate of -0.1% on policy-rate balances and purchase of Japanese government bonds to keep 10-year JGB yields around 0%.
- Inflation is expected to decelerate temporarily but projected to accelerate moderately later, supported by improvements in the output gap and inflation expectations.
- Japan’s economy is expected to recover gradually.
- The next meeting is scheduled for July 27, 2023.
Next 24 Hours Bias: Mixed
Global Market Overview
Asian Stock Markets
- Nikkei: +1.89%
- Shanghai Composite: -0.30%
- Hang Seng: -0.24%
- ASX: +1.25%
- DAX futures: +0.21%
- CAC 40: +0.43%
- FTSE: +0.11%
US Stock Market
- Dow Jones: +0.04%
- S&P 500: +0.45%
- Nasdaq 100: +1.18%
- Gold: $1915.22 (+0.09%)
- Silver: $22.90 (+0.33%)
- Brent Oil: $72.86 (+0.48%)
- WTI Oil: $68.01 (+0.46%)
News & Data
- (AUD) CPI (YoY) Actual: 5.6%, Forecast: 6.1%, Previous: 6.8% at 07:00
- (USD) Fed Chair Powell Speaks at 19:00
- (EUR) ECB President Lagarde Speaks at 19:00
- (GBP) BoE Gov Bailey Speaks at 19:00
- (USD) Crude Oil Inventories Forecast: -1.757M, Previous: -3.831M at 20:00
Wednesday 28 June 2023: Technical Outlook
GBPUSD: Bearish Momentum Indicates Downward Trend
The GBP/USD chart currently exhibits bearish momentum, signaling a downward trend in the market. Traders should take note of the following key levels:
- Overlap Support at 1.2718: The price may continue moving downward towards this support level.
- Pullback Support at 1.2696: This support level coincides with the 61.80% Fibonacci Retracement, providing additional strength.
- Overlap Resistance at 1.2736: This resistance level has the potential to hinder price growth.
- Swing High Resistance at 1.2759: The second resistance level indicates the presence of Fibonacci confluence.
TRADE SUGGESTION: Consider selling at 1.2717 with a take profit (TP) at 1.2684 and a stop loss (SL) at 1.2744.
EURUSD: Bearish Momentum and Key Levels
The EUR/USD chart currently shows bearish momentum, indicating a market bias towards the downside. Here are the significant levels to watch:
- Pullback Support at 1.0943: The price may fall towards this support level, which aligns with the 50% Fibonacci Retracement.
- Overlap Support at 1.0928: This support level offers further stability to potential price declines.
- Overlap Resistance at 1.0954: The first resistance level may prevent upward price growth.
- Overlap Resistance at 1.0965: The second resistance level serves as an additional barrier.
It’s important to note the intermediate resistance level at 1.0911, coinciding with the 78.60% Fibonacci Retracement, which adds significance to this level.
TRADE SUGGESTION: Consider buying at 1.0948 with a TP at 1.0936 and an SL at 1.0958.
AUDUSD: Negative Trend Suggests Downward Movement
The AUD/USD chart currently indicates a negative trend, suggesting the potential for further downward movement. Consider the following levels:
- Overlap Support at 0.6640: This support level may experience a bearish bounce and is strengthened by Fibonacci confluence.
- Pullback Support at 0.6618: The second support level adds significance to the support area.
- Overlap Resistance at 0.6662: The first resistance level acts as an obstacle to upward price movement.
- Swing High Resistance at 0.6884: The second resistance level represents a significant barrier.
TRADE SUGGESTION: Consider selling at 0.6639 with a TP at 0.6618 and an SL at 0.6659.
USDJPY: Positive Momentum Indicates Potential Upside
The USD/JPY chart currently exhibits positive momentum within a positive ascending channel, suggesting the possibility of further upward movement. Keep an eye on the following levels:
- Retreat Support at 142.27: This support level provides potential strength to the support zone.
- Overlap Support at 141.28: The second support level aligns with the 78.60% Fibonacci projection.
- Pullback Resistance at 145.01: Consider the possibility of a bullish continuation towards this resistance level.
- Pullback Resistance at 146.77: The second resistance level corresponds with the 78.60% Fibonacci Retracement.
An intermediate support level at 143.19 offers additional weight as an overlap support.
TRADE SUGGESTION: Consider buying at 144.13 with a TP at 144.54 and an SL at 143.77.
FTSE 100: Bearish Momentum Indicates Negative Market Direction
The FTSE 100 chart currently displays bearish momentum, indicating a negative market direction. Pay attention to the following levels:
- Overlap Support at 7441.3: The first support level is strengthened by the presence of Fibonacci retracements.
- Overlap Support at 7373.0: The second support level aligns with the 61.80% Fibonacci Retracement and the 145.00% Fibonacci Extension.
- Overlap Resistance at 7505.55: The first resistance level may prevent price advancement.
- Overlap Resistance at 7577.8: The second resistance level coincides with the 61.80% Fibonacci Retracement.
TRADE SUGGESTION: Consider selling at 7461.10 with a TP at 7404.15 and an SL at 7512.07.
Brent Crude Oil: Negative Momentum Points to Bearish Outlook
Negative momentum is observed on the Brent crude chart, suggesting a bearish outlook. Take note of the following levels:
- Multi-Swing Low Support at 72.53: This support level serves as a solid foundation.
- Multi-Swing Low Support at 69.97: The second support level increases in significance.
- Overlap Resistance at 74.40: The first resistance level may impede price growth.
- Multi-Swing High Resistance at 77.06: The second resistance level underscores its importance.
The first resistance level aligns with the 50% Fibonacci Retracement level, showing Fibonacci confluence.
TRADE SUGGESTION: Consider selling at 72.45 with a TP at 71.59 and an SL at 73.17.
Gold (XAU/USD): Bullish Momentum Supports Positive View
The XAU/USD (Gold/US Dollar) chart currently demonstrates bullish momentum, indicating a positive view for the market. Consider the following levels:
- Overlap Support at 1911.62: This support level offers price stability.
- Overlap Support at 1867.07: The second support level adds additional support.
- Overlap Resistance at 1936.86: The first resistance level may hinder price growth.
- Multi-Swing High Resistance at 1968.05: The second resistance level is categorized as a significant barrier.
TRADE SUGGESTION: Consider buying at 1911.70 with a TP at 1917.08 and an SL at 1908.15.
Litecoin (LTC/USD): Neutral Momentum with Key Levels
The LTC/USD (Litecoin) chart currently exhibits neutral momentum, lacking a clear market direction. Pay attention to the following levels:
- Overlap Support at 85.81: This support level is reinforced by the 23.60% Fibonacci Retracement.
- Overlap Support at 80.33: The second support level aligns with the 50% Fibonacci Retracement.
- Pullback Resistance at 89.99: The first resistance level may act as a barrier to further momentum.
- Swing High Resistance at 93.39: The second resistance level poses a potential obstacle.
TRADE SUGGESTION: Consider selling at 85.25 with a TP at 84.42 and an SL at 85.94.
In conclusion, the analysis of various currency pairs and market indices provides valuable insights for traders. By considering the support and resistance levels, as well as the trade suggestions, traders can make informed decisions to navigate the market and potentially maximize their profits. However, it’s important to note that market conditions can change rapidly, and traders should always conduct their own research and exercise caution when making trading decisions.
Frequently Asked Questions (FAQ)
1. What is the current outlook for the GBP/USD currency pair?
The current technical outlook for the GBP/USD currency pair suggests a bearish trend in the market, indicating a downward movement. The price may continue to decline towards the first support level at 1.2718. It is important to monitor the support and resistance levels for potential trading opportunities.
2. Are there any potential trade suggestions for the EUR/USD currency pair?
Based on the technical analysis, there is a bearish momentum in the EUR/USD chart, indicating a market bias towards the downside. Traders may consider buying at 1.0948 with a take profit (TP) level at 1.0936 and a stop loss (SL) level at 1.0958. It is advisable to closely observe the support and resistance levels for any price movements.
3. What does the technical outlook indicate for Brent Crude Oil?
The technical outlook for Brent Crude Oil suggests a bearish market outlook with negative momentum. Traders should be aware of the first support level at 72.53, which is a significant area of multi-swing low support. It is recommended to closely monitor the price movement and consider selling at 72.45 with a TP at 71.59 and an SL at 73.17.
4. Is there any trading suggestion for Gold (XAU/USD)?
Based on the bullish momentum observed on the XAU/USD chart, traders may consider buying at 1911.70 with a TP at 1917.08 and an SL at 1908.15. It is important to note the support levels, such as the overlap support at 1911.62, which may provide price stability.
5. What is the market direction for Litecoin (LTC/USD)?
The LTC/USD chart currently exhibits neutral momentum, indicating a lack of clear market direction. Traders should be cautious and consider the support and resistance levels, such as the overlap support at 85.81 and the pullback resistance at 89.99. It is advisable to closely monitor price movements before making trading decisions in Litecoin.