2023 Market Forecast by Solid ECN

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GBPJPY Keeps the Positivity

The GBPJPY pair kept its positive stability above the additional support 159.90, to confirm surrendering to the domination of the suggested bullish bias by touching 161 level, reminding you that it is important to gather the additional positive momentum to manage to breach the moving average that forms an obstacle at 162.10, to ease the mission of reaching the additional positive stations near 163 followed by 164.45.

The expected trading range for today is between 160.4 and 162.​

 

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EURUSD - The price is in a correction and a fall is possible.

On the daily chart, the downward wave of the higher level А ended, and the development of the upward wave B started, within which the entry first wave of the lower level 1 of (А) of B formed. Now, a downward correction is developing as the second wave 2 of (А) of B, within which the wave a of 2 has formed, and the wave b of 2 is developing.

If the assumption is correct, the EURUSD pair will fall to the area of 1.0325 – 1.0163. In this scenario, critical stop loss level is 1.1040.

 

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GBPUSD - The price is in a correction and a fall is possible.

On the daily chart, the upward first wave of the higher level (1) formed, within which the wave 5 of (1) ended. Now, a downward correction is developing as the second wave (2), within which the wave of the lower level A of (2) has formed.

If the assumption is correct, after the end of the wave B of (2), the GBPUSD pair will fall to the area of 1.1400 – 1.1155. In this scenario, critical stop loss level is 1.2437.

 

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Benchmark Brent Crude Oil prices are correcting at 83.00.

The market remains stable against the background of incoming multidirectional, fundamental information. Thus, the export of Russian oil is actively redirected to new markets after the introduction of economic sanctions by the EU and members of the G7, and yesterday, India announced another record for energy purchases: total imports in January for the first time exceeded 5.0M barrels per day, and in second place in terms of supply is Russia, which sold a record 1.4M barrels per day, up 9.2% compared to December, while the share of oil from the Middle East in total oil imports India decreased to 48.0%, although at the beginning of last year, it exceeded 80.0%. Meanwhile, the US authorities are developing additional measures to block Russian oil exports. According to Bloomberg, the new bans are planned to be directed against the defense and energy sectors, focusing on compliance with current restrictions and preventing circumvention of price cap restrictions.

Thus, the supply of raw materials on the world market continues to grow, and the data on stocks from the Energy Information Administration of the US Department of Energy (EIA), which recorded a growth of 16.283M barrels, clearly confirm that it does not allow the asset quotes to return to growth.

On the daily chart, the trading instrument is moving within the local ascending corridor, completing the next wave of decline and getting ready for a reversal, and the technical indicators are uncertain, pointing to a local correction.

Resistance levels: 85.6, 91 | Support levels: 80, 75.5​

 

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NZDJPY

NZDJPY may be entering a volatile week. The Reserve Bank of New Zealand is scheduled to announce the next monetary policy decision on Wednesday at 1:00 am GMT. There is a lot of uncertainty around this announcement. Money markets price in around 40 basis points of tightening and majority of economists polled by Bloomberg see 50 bp rate hike as the base case scenario. However, calls for a lower hike or even a pause have been mounting recently as New Zealand is facing floods and damage from a cyclone. A decision to pause rate hikes to wait and see what damage to the economy weather has done, would be surprising and would likely trigger a pullback on NZD market.

When it comes to the JPY-side, an event to watch this week is the confirmation hearing of Kazuo Ueda in the lower house of the Japanese parliament scheduled for Friday, February 24. Ueda has been nominated to succeed Kuroda as Bank of Japan head and this week's confirmation hearing will be his first appearance since nomination. Any suggestions that the Bank of Japan may exit or roll down highly expansionary policy under his watch could trigger moves on the JPY market.

Taking a look at NZDJPY chart at D1 interval, we can see that the pair has been largely trading sideways as of late. The pair failed to break above the midpoint of the trading range in the 84.50 zone. Apart from previous price reactions, this zone is also marked with a 200-session moving average. Moves on the pair has been recently confined to the inner 82.50-84.50 range and high-volatility events scheduled for this week, especially RBNZ decision, could lead to a breakout, direction of which may determine the direction of the next big move.​

 

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AUDUSD Approaches Major Resistance

The Australian dollar is the best performing G10 currency today as rising copper prices seem to support the resources-linked currencies amid subdued USD demand. AUDUSD bounced off the lowest level since January 6 touched on Friday and returned above 0.6900 level, however hawkish FED and simmering tensions between US and China may limit the upside movement. Currently the pair is approaching local resistance at 0.6925, which is marked with previous price reactions, 50% Fibonacci retracement of the last upward wave and 50 SMA (green line). Break higher would pave a way towards the next resistance at 0.6980, however if sellers manage to regain control and halt advances, then another downward impulse towards support at 0.6870 may be launched. Aussie may experience increased volatility in the evening and the coming Asian session, during the releases of flash PMI for February and RBA minutes.

One can observe a significant weakness of the US dollar, despite heightened geopolitical tensions.

 

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EURUSD

The bullish momentum of recent months eased in February. The last sessions have been marked by some indecision in the price that ended up consolidating.

On the dollar index chart, we can see that there may be room for further declines in the dollar. Friday's daily candle rejected the 200-period EMA and if the price moves back below the 200- and 50-period EMAs, then the EUR could gain against US Dollar weakness.

AUD leads the gains this trading session.

 

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Silver

Major European indices finished today's session mostly lower, with Dax closing slightly below the flatline as traders brace themselves for the release of critical PMI data for the eurozone and the US due tomorrow before the publication of FOMC minutes later on Wednesday. ECB's Rehn said rates should be raised after March and the terminal rate could be reached this summer.

Silver bounced off the key support zone around $21.35-21.45 on Friday, which is marked with the lower limit of 1: 1 structure and 50% Fibonacci retracement of the last bullish wave. Moreover, a hammer formation has appeared on the D1 interval, which may be a sign that recent downward correction may have come to an end.​

 

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AUDUSD

• Indices from Asia-Pacific traded mixed today. Nikkei and S&P/ASX 200 dropped 0.2% each, Kospi and Nifty 50 gained 0.1% while indices from China traded mostly lower.​
• DAX futures point to a more or less flat opening of the European cash session today.​
• RBA minutes showed that Australian central bankers see inflation as more broad and persistent than expected. The document also strongly hinted that rate hike pause at meeting in February was not an option.​
• New Zealand Treasury said in a statement that reconstruction after a cyclone hit will be a boost to the New Zealand economy. Treasury noted, however, that boost to the demand will increase inflationary pressures in the economy and may cause RBNZ to hold rates at higher levels for longer.​
• BoJ Governor Kuroda expects wage growth in the Japanese economy to accelerate as labor market gets tighter.​
• Australian manufacturing PMI index ticked higher in February, from 50.0 to 50.1. Services index moved from 48.6 to 49.2.​
• Japanese manufacturing PMI dropped from 48.9 to 47.4 in February (exp. 49.2).​
• Cryptocurrencies are trading mixed with major coins posting decent gains. Bitcoin trades 1% higher, Ethereum gains 0.6% and Dogecoin moves 0.4% higher.​
• Energy commodities trade mixed - Brent drops 0.6%, WTI trades 0.9% lower and US natural gas prices increased 0.3%.​
• Precious metals pull back as USD strengthens - gold trades 0.2% lower, silver drops 0.5% and platinum declines 0.7%.​
• USD and GBP are the best performing major currencies while NZD and AUD lag the most.​

In spite of a rather hawkish RBA minutes release, Australian dollar is pulling back today. AUDUSD is one of the worst performing major FX pairs as USD is on the rise. AUDUSD made an attempt at breaking back above a price zone marked with 50-session moving average (green line) and 50% retracement of the downward move launched in April 2022 but failed and a pullback was launched.​

 

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USDCAD

The Canadian dollar is weakening against the U.S. dollar ahead of an inflation reading from Canada, which will be announced at 1:30 pm GMT. The Bank of Canada recently announced the formal end of the 4.5% hike cycle (a 25 bp decision). The reading will show whether, in view of problems with the dynamics of a further decline in inflation in the USl, the BoC's decision to pause the cycle was premature. Analysts' consensus points to a CPI reading of around 6.1% vs. 6.3% previously, with an estimate of 5.1% for core inflation.

Wells Fargo expects Canadian inflation to fall as low as 6% in January as pressure from high energy prices wanes. The bank also expects the BoC to maintain a dovish stance over the next few quarters and to be one of the first central banks to decide to cut rates perhaps in the fourth quarter of this year, in the face of deteriorating economic conditions. A stronger-than-expected drop in CPI to 6% is also expected by TDS. The rental market, service prices and gasoline are likely to remain key drivers of inflation, while home furnishings and clothing should weigh on the reading. Citibank analysts indicated that the core inflation reading will be key, however. While CPI inflation may fall slightly primarily due to the high base effect, the risk remains that Canada's core inflation will stabilize in the summer at excessive levels of 3 to 4%.

USDCAD is weakening ahead of the reading, although bears may try to push the pair back below the 1.347 levels, which coincide with the SMA200 (red line), the 23.6 Fibonacci retracement of the upward wave started in mid-February and the local peak of February 16. Sellers may be stronger if the reading (like recent US data) indicates a lower rate of inflation decline. The level of 1.347 may be crucial for the bulls to hold.​