2023 Market Forecast by Solid ECN

[SOLID ECN LLC]

EURUSD

Media reports surfaced saying that ECB officials told at a meeting with European ministers yesterday that some of European banks could be vulnerable amid SVB-Credit Suisse turmoil. Headlines triggered a slump on EUR market as well as European stock market indices. EURUSD dipped back below 1.06 mark while DE30 attempts to take out daily lows near 14,750 pts.

EURUSD dipped below 1.06 on media reports that ECB sees some European banks as vulnerable.​

 

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USDJPY​

• US indices finished yesterday's session higher as a rescue package for First Republic Bank eased market concerns about another bank failure in the US. S&P 500 rose 1.76%, Dow Jones added 1.17% and Russell 2000 jumped 1.38%. Nasdaq outperformed and managed to finish 2.48% higher​
• Indices from Asia-Pacific traded higher today - Nikkei rose 1.10%, S&P/ASX 200 moved 0.48% higher while Kospi and Nifty 50 gained 0.60% and 0.25% respectively. Indices from China traded higher as well​
• DAX futures point to a higher opening of today's European cash session​
• First Republic Bank reportedly exploring potential sale, according to Fox Business​
• US Treasury Secretary Yellen told senators that government refunds of uninsured deposits will not be extended to every bank that fails, only those that pose systemic risk to the financial system​
• Fitch believes that recent developments in US will not cause major shifts in US monetary policy​
• S&P affirms US at AA+; with Outlook Stable pointing to continued economic resilience​
• MUFG analysts said US inflation data remained elevated enough to justify FED 25bp rate hike next week​
• Goldman Sachs expects ECB to hike rates by 25 bps in May​
• Japan Economy Minister Goto doesn't expect a big impact on Japan's economy from US banking sector issues​
• Cryptocurrencies are trading higher today - Bitcoin jumped over 4.0% and is testing 26,000 mark, while Ethereum advances more than 2.0%​
• Energy commodities are trading mixed - oil rose 0.3% while US natural gas prices fell 0.8​
• Precious metals trade higher today - silver jumped 1.4%, gold adds 0.7%​
• AUD and NZD are the best performing major currencies while USD and CAD lag the most​

USDJPY pair pulled back to major support at 133.00, which coincides with 38.2% Fibonacci retracement of the upward wave launched in January 2021.​

 

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USDCHF​

USDCHF pair provided clear negative trades yesterday, and begins today with new decline to attempt to break 0.9260 level again, reinforcing the expectations of continuing the bearish trend in the upcoming sessions, reminding you that our waited targets begin at 0.9150 and extend to 0.9060.

Stochastic provides negative signals that support the continuation of the expected decline, reminding you that the continuation of the bearish wave depends on the price stability below 0.9316.​

 

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Bitcoin​

Cryptocurrencies are enjoying another day of strong gains with BITCOIN rallying over-7% and looking towards the $27,000 mark. The most popular coin took out a local high from Tuesday today and reached a fresh 9-month high. While cryptocurrencies performed poorly between mid-February and early-March, the digital asset market took a U-turn this week. Actions of US authorities aimed at stemming contagion risk from collapse of tech- and crypto-related banks, triggered a rally on cryptocurrencies market. Bitcoin is currently trading over 35% above a local low reached as recently as a week ago on March 10, 2023. Solid gains have been all across the cryptocurrency market this week.

A number of cryptocurrencies rallied over-20% over the past week! Taking a look at the BITCOIN chart at D1 interval, we can see that the coin has not only fully recovered from the February 21 - March 10 sell-off but has even jumped noticeably above mid-Friday's peak in the $25,000 area. Coin is closing in on a $27,000 mark. Near-term potential resistance levels to watch are marked with lower and upper limits of a short-term trading range from May and June 2022 at $29,000 and $31,500, respectively.​

 

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GBPCHF

Fed is not the only major central bank scheduled to announce a monetary policy decision next week. Investors will also hear from the Bank of England and Swiss National Bank, both decisions on Thursday. The former is expected to deliver a 25 bp rate hike. However, interest rate futures are pricing a 40% probability that rate will remain unchanged. At the same time SNB is in a tough situation, taking into account elevated inflation and uncertainties surrounding Credit Suisse. Investors expect a more dovish approach from Swiss policy makers. Market now expects only a 25 bp rate hike, while at the beginning of the month a 75 bp move was priced in.​

 

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EURUSD

The EURUSD pair shows calm positive trades to gradually towards our waited target at 1.0745, getting good support by the EMA50, to keep the bullish trend suggested for the upcoming period.

It is important to monitor the price when reaching the targeted level, as breaching it will extend the bullish wave to reach 1.0920 areas as a next main station, while consolidating against the bullish wave will press on the price to rebound bearishly to test the minor support areas around 1.0635 initially. On the other hand, we should note that breaking 1.0635 will stop the expected rise for today and push the price to turn to decline to visit 1.0515 level as a first station.​

 

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GBPUSD

The GBPUSD pair provided new positive trades to test 1.2200 barrier, waiting to get positive motive that assists to push the price to continue the price and achieve our positive targets that start at 1.2260 and extend to 1.2440 after surpassing the previous level.

The EMA50 continues to support the expected bullish wave, which depends on the price stability above 1.2060, as breaking it will put the price under negative pressure that targets testing 1.1940 before any new attempt to rise.​

 

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Gold ​

Precious metals gain amid increase in risk-aversion and pullback in US yields

Strong upward move launched on the gold market on March 8, 2023 is continuing at the beginning of a new week. Risk-off moods can be spotted on the financial markets at the beginning of a new week and it is providing support for safe haven assets, like for example gold. UBS will buy troubled Swiss lender, Credit Suisse, in a government-brokered deal. However, this failed to ease market concerns as the deal will include write down of Credit Suisse's AT1 bonds and this may turn out to be a hit to banks and other institutions with exposure to Credit Suisse. Apart from that, Fed and 5 other central banks (ECB, BoJ, BoE, BoC and SNB) will switch from weekly to daily USD swap auctions in order to boost USD liquidity. US yields pulled back providing even more support for precious metals.

As a result of those market moves, gold is trading over 1% higher on the day. Gold price climbed above $2,000 per ounce this morning, reaching the highest level since March 2022.​

 

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Oil​

Oil launched a new week's trading lower amid an overall increase in risk aversion. WTI drops below $65 per barrel and trades at the lowest level since November 2021! Declines accelerated after price dropped below a key $70-72 price zone last week. The $60-65 area is a demand zone marked with local lows from 2021 and local highs from 2019 and 2020.

There are few reasons behind a drop in oil prices:​

• Concerns over conditions of banking and financial systems in the United States and Europe. UBS will acquire Credit Suisse but it failed to ease market concerns​
• Demand in China remains weak - imports stay low, run rates in refineries drop but at the same time Chinese exports of oil derivatives are increasing, what may hint at oversupply in the country​
• Lack of interest from speculators - end-February data shows oil being extremely net oversold by speculators​
• Goldman Sachs - one of the world's largest institutional bulls when it comes to oil - slashed Brent price 12-month ahead forecast from $100 to $94 per barrel​

WTI (OIL.WTI) drops below $65 per barrel. Price dropped to a key zone, marked with local highs and lows from previous years, as well as with the range of two largest downward impulses in recent year (2014 and 2020).​

 

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EURUSD​

Euro continues to recover against the dollar at the beginning of this week, after a sharp crash in the last week - that was motivated by the worries around Credit Suisse that put the European banking sector under pressure and heavily penalized the euro.

Daily Time Frame EUR/USD​

• On the daily chart, we can see that the price is once again testing the upper limit of the range, close to 1.0695.​
• This will be a decisive zone for the price to understand the next momentum in the currency pair.​

Dollar Index Daily Time Frame​

• On the dollar index chart, we can see that the bullish movement slowed down after the price tested the 50 period exponential moving average (EMA).​
• As long as the price remains below this zone, we should expect the bearish movement to continue over the next few sessions.​

• USD index, Daily time frame chart.​
• JPY leads the gains this trading session.​