. Fundamental Analysis Report With Charting Trends- 31 March 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 31 MARCH 2023

FUNDAMENTAL ANALYSIS REPORT WITH CHARTING TRENDS – 31 MARCH 2023

31 Mar 2023

MARKET UPDATE:

Stocks remain upbeat because “No News is Good News” – the Nasdaq is up 0.7%.

Aiming to place the recent banking crisis firmly in the rear-view mirror, investors drove the global markets higher throughout the trading day yesterday. The major US indices ended the day comfortably up, albeit off their daily highs: the Dow finished up 0.43%, the S&P up 0.57%, and the tech-heavy Nasdaq outperformed once more up 0.73%. The day ended well for all global equity markets. The safe-haven allure of the dollar has faded, and US bond yields have fallen, with the 110-year down 1.7bps on the day. The dollar has continued to lose ground against the majors.

The Investors’ Focus Is on Important US Data

Market sentiment has totally changed from a few weeks ago, and everything is looking very positive once more. We can all rest knowing that the banking crisis was only a minor squall for the “good ship global growth,” so to speak. It’s a nice story, but let’s face it: We might just be living a little bit in a dream world. Tonight’s important PCE data out of the US could serve as the catalyst to bring us back to reality with a bump. This is especially true given that it is released as liquidity begins to dwindle into the weekend.

Busy Trading Day into the Weekend

Investors anticipate another solid trading day as the weekends. There are however some possible pitfalls soon due to the abundance of macroeconomic data that will be released over the next few sessions. The most recent Chinese PMI numbers will receive a lot of attention in Asia. These numbers will be followed by a plethora of lower-tier data in Europe, with the CPI Flash forecasts serving as the standout. Though the PCE data, the Canadian GDP figure, and several FOMC members providing us with their most recent updates will likely be the major events once the New York session gets underway. If someone puts a spanner in the works of what has thus far been a much more positive week for investors, things could get a little messy.

What happened in the Asian session?

In comparison to the forecasted increase of 3.1% and the previous reading of 3.3%, the Tokyo Core CPI y/y data release revealed an increase of 3.2%. This suggests that Japan’s inflation is still steadfast.

The Australian Private Sector Credit m/m data release revealed a rise of 0.3%, which was less than the 0.4% increase that was anticipated and seen in earlier readings. This indicates that Australia’s private-sector lending has slowed. Better-than-anticipated Chinese Manufacturing & Non-Manufacturing PMIs could, however, counteract the AUD’s weakening.

What does it mean for Europe & US Session?

The two sessions should center on EUR/USD as several secondary data releases, including the Core PCE Price Index m/m for the US and the CPI Flash Estimate y/y for Europe, complement the crucial inflation pronouncements.

The pair is currently trading below the most recent highs, which were around 1.0930. A 100-pip increase towards 1.1030 may be enabled by higher Eurozone inflation statistics or by a US PCE reading that is lower than anticipated. An upward scenario would be strengthened by a breach above the psychological resistance at 1.1000.

The Japanese Yen (JPY)

Key news events today

Tokyo Core CPI y/y

What can we expect from JPY today?

A flurry of Japanese data releases today, including the Tokyo Core CPI y/y (forecast 3.1%, previous 3.3%), Unemployment Rate: (forecast 2.4%, previous 2.4%), Prelim Industrial Production m/m (forecast 2.8%, previous -5.3%), Retail Sales y/y (forecast 5.9%, previous 5.0), and Housing Starts y/y (forecast -0.5%, previous 6.6%), can have a mixed impact.

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

Mixed

The Euro (EUR)

Key news events today

CPI Flash Estimate y/y

Core CPI Flash Estimate y/y

ECB President Lagarde Speaks

What can we expect from EUR today?

It is anticipated that the upcoming Eurozone CPI Flash Estimate y/y data will drop from 8.5% to 7.1%, signalling a calming of price pressures. Core CPI Flash Estimate y/y data, however, is forecast to rise from 5.6% to 5.7%, indicating that underlying inflationary forces are still present. The comments made by ECB President Lagarde during the US session might make the Euro more volatile.

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

Mixed

The Swiss Franc (CHF)

Key news events today

Gov Board Member Machler Speaks

What can we expect from CHF today?

The Governing Board member Machler’s speech might shed light on the central bank’s position on monetary policy and upcoming decisions. The Retail Sales y/y report for Switzerland is forecast to come in at -1.0%, up from the prior reading of -2.2%. The forecast for the KOF Economic Barometer is 100.4, which indicates a slight improvement from the previous figure of 100.0. The readings that were greater than anticipated could result in a stronger CHF.

Central Bank Notes:

  • Raised policy rate to 1.5% to counter inflationary pressure and ensure price stability. The SNB may need to raise the policy rate further in the future
  • The SNB is providing liquidity assistance to Credit Suisse, and the crisis has been halted
  • The new inflation forecast assumes a policy rate of 1.5% and puts average annual inflation at 2.6% for 2023 and 2.0% for 2024 and 2025.
  • Mortgage and real estate market vulnerabilities persist
  • Next meeting on 11 April 2023

Next 24 Hours Bias

Bullish

The Canadian Dollar (CAD)

Key news events today

GDP m/m

What can we expect from CAD today?

With an anticipated growth rate of 0.4%, the Canadian economy is predicted to rebound, suggesting a possible improvement over the previous quarter, which had decreased by -0.1%. The CAD could gain if the current period’s GDP growth rate is greater than anticipated.

Central Bank Notes:

  • Bank of Canada maintains its target for the overnight rate at 4.5%
  • Inflation eased in January, but price increases for food and shelter remain high
  • BOC is prepared to increase the policy rate further to return inflation to the 2% target.
  • Next meeting on 12 April 2023

Next 24 Hours Bias

Bullish

Global Markets:

Asian Stock Markets: Nikkei up 0.93%, Shanghai Composite up 0.36%, Hang Seng up 0.45%, ASX up 0.78%

European equities, the DAX futures down 0.01%, CAC 40 up 0.10%, FTSE up 0.69%.

US Stock Market: Dow jones up 0.43%, S&P 500 up at 0.57%, Nasdaq 100 up at 0.73%.                    

Commodities: Gold at $1976.88 (-0.20%), Silver at $23.78 (-0.54%), Brent Oil at $78.00 (-0.75%), WTI Oil at $73.98 (-0.51%)

News & Data

  • (USD) Core PCE Price Index (MoM) (Feb) Forecast 0.4%, Previous 0.6% at 18:00
  • (CAD) GDP (MoM) (Jan) Forecast 0.3%, Previous –0.1% at 18:00
  • (EUR) ECB President Lagarde Speaks at 20:30
  • (GBP) GDP (QoQ) (Q4) Actual 0.1%, Forecast 0.0%, Previous –0.3% at 11:30
  • (CNY) Manufacturing PMI (Mar) Actual 51.9, Forecast 51.5, Previous 52.6 at 07:00

Technical Outlook

GBPUSD

Overall, the GBP/USD chart is displaying a bearish momentum as price may respond negatively off the first resistance level and decline to the first support level.

1.2341 is a strong overlap support level that serves as the first degree of support. The second support level, which is also an overlap support level, is located at 1.2273 as well. Due to their historical stability and significance as price levels, these support levels are advantageous for possible price rebounds.

The first resistance level, on the other hand, is at 1.2429 and is a multi-swing high resistance level. This level has historically prompted price to reverse and has the potential to do so again. The second resistance level, which is a swing high resistance level, is located at 1.2511. A market reversal may also result from this level.

EURUSD

A potential bearish reaction off the first resistance level at 1.0929, which is a multi-swing high resistance level and coincides with a 78.60% Fibonacci retracement, is indicated by the EUR/USD chart’s present bearish momentum. Price could possibly drop to the first support level at 1.0830, a multi-swing low support level, if it fell from this level.

The second support level at 1.0764, which is an overlap support level and corresponds with the 38.20% Fibonacci retracement level, may also be relevant in the case of a further decline.

On the other hand, a rise towards the second resistance level at 1.1031, which is a swing high resistance level and corresponds with a -27% Fibonacci expansion, could result from breaking through the first resistance level.

AUDUSD

Currently, the chart’s overall momentum is bullish, suggesting that the price may continue to climb. Price movement is anticipated to continue in a bullish direction towards the first resistance mark.

Due to its overlapped nature, the first support level at 0.6642 is a strong degree of support. The multi-swing low support level at 0.6582 is another strong level of support. A 38.20% Fibonacci retracement level, which strengthens the resistance, corresponds with the first resistance level, which is at 0.6771, making it a strong level of resistance. Due to its overlap and alignment with a 50% Fibonacci retracement level, the second opposition level at 0.6875 is also a strong level of resistance.

USDJPY

Looking at the chart, price may continue to move downward towards the first support at 131.62, a powerful overlap support that also happens to be a 50% Fibonacci retracement level.

Price could decline to the second support at 130.31, which is also a multi-swing low support, if it were to breach the first support.

On the resistance side, we can see that the first resistance level of 133.80, which is a swing high resistance and a 50% Fibonacci retracement level, is where price is presently encountering a significant obstacle.

The second resistance at 133.73, which is an overlap resistance and a 61.80% Fibonacci retracement level, is the next resistance level price could head towards if it were to break above the first resistance.

It’s important to remember that between the present price and the first support, at 134.74, there is an interim support level. A breach of this interim support could lead to a significant bearish escalation in the direction of the first support.

DAX 40

The price may find firm support at the first support level, which has already been tested several times and is located at 15450.5. Another powerful potential support level is the second support level, which is located at 15275.3 and coincides with a 78.60% Fibonacci projection. It is also an overlap support.

The first resistance level, which is at 15659.1 and is a multi-swing high resistance, on the other hand, shows that it has historically been a major area of resistance. This resistance level also coincides with a Fibonacci projection of 161.80%, suggesting that it could be a significant region of resistance. A swing high resistance at the second resistance level of 15917.5 may also act as a barrier for the market.

WTI CRUDE OIL

On the charts, WTI crude oil prices have been trending downward. At this time, the price may move negatively in the direction of the first barrier at 74.02 and decline to the first support at 71.16. The second support is an overlap support and a 78.60% Fibonacci retracement, while the first support is a substantial overlap support. The first barrier, on the other hand, overlaps with a 61.80% Fibonacci retracement. The second resistance, which is located at 77.37, is also a swing high barrier with a 78.60% Fibonacci retracement. At 72.61, there is another overlap support which is an intermediary support.

Additionally, the RSI is showing a bearish divergence from the price, which indicates that a turnaround may be imminent. In the upcoming days or weeks, it’s critical to monitor these levels and the RSI for any possible breakthroughs or reversals.

GOLD

The first support level, which is overlap support and falls on a 38.20% Fibonacci reversal, is at 1935.72. Price could move towards the second support at 1910.34, which also overlaps support and coincides with a 50% Fibonacci correction if it were to fall below this level.

The first resistance mark, which is at 1985.37, is a strong overlap resistance and lines up with a 23.60% Fibonacci retracement. Price might move upward towards this level if it were to retrace from the first support. The resistance level could, however, result in a bearish response that drives prices back down towards the first support.

If price were to break above the first resistance level, which is at 2003.03, it could climb towards the second resistance level, which is a multi-swing high resistance.

BITCOIN

The present trend on the BTC/USD chart is bearish, and it may continue towards the first support level at 25955. Given that it has previously served as an overlap support, this support level is regarded as robust.

The second support level at 24515 is the level to which the price could fall if it were to breach the first support level. The fact that this support level coincides with the 50% Fibonacci reversal adds further significance to it.

In contrast, the first resistance level at 29333 is regarded as powerful because it previously served as a swing high resistance. Price could possibly move upward towards this resistance level if it were to retrace its steps from the first support level.

In addition, there is a swing high resistance level at 30202 that could possibly provide additional resistance if the price were to increase in its direction.