2023 Market Forecast by Solid ECN

Gold Rises Amid US Rate Cut Speculation; Eurozone Woes​

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Solid ECN – Gold prices slightly increased to about $2,035 per ounce this Wednesday, influenced by the decline in yields. This change comes as traders evaluate the potential for more accessible monetary policies before releasing important US inflation data tomorrow.

Additionally, the financial community is keeping a close eye on the speeches from various Federal Reserve officials. Regarding broader economic indicators, the US economy expanded by 3.2% in the fourth quarter, a bit lower than the initially predicted 3.3%, demonstrating a robust financial framework.

Investors predict that the Federal Reserve will maintain the current interest rates in March and May, with a more than half likelihood of a rate reduction by June. In other news, the economic mood in the Eurozone has taken a downturn in February, falling below expectations and indicating a drop in consumer demand.​
 

GBPJPY Navigates Bullish Patterns Amid Mixed Signals​

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Solid ECN – The GBPJPY currency pair recently declined from the upper line of its bullish wedge pattern at the 191.0 mark. Subsequently, the pair tested the lower band and bounced back from 190.2, and it currently trades around 190.6.

The primary trend remains bullish, but the technical indicators provide mixed signals. On one hand, the RSI indicator suggests continuing the bull market. On the other hand, the Awesome Oscillator bars have turned red and are approaching the signal line, indicating potential caution. Based on the primary GBPJPY trend, we can predict that the uptick momentum will likely resume if the pair maintains its position within the wedge's boundaries.

Even if the price dips below the 190.2 level, considered a resistance point, the Ichimoku cloud emerges as the next significant barrier for the sellers.

From a technical standpoint, as long as the price remains above the cloud, our technical analysis remains unchanged. This situation suggests a potential for continued bullish behavior, securing any significant market shifts.​
 

Anticipated Rise of Pound Sterling: A Clear Signal from Technical Indicators​

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Solid ECN – As anticipated, the pound sterling has once again risen from the support zone of the Ichimoku cloud, the 1.2621 mark. Today, the technical indicators are providing a clearer signal. With the RSI flipping above the median line and the appearance of green bars on the awesome oscillator, we can forecast that the bull market will likely expand further.

The first significant milestone for the bulls is reaching the February high of 1.2709. Interestingly, this resistance level is reinforced by the 61.8% Fibonacci retracement, adding to its significance.

However, it's important to note that if the GBPUSD price falls below the cloud, the validity of the bull market could be called into question. This is a crucial point to remember as we monitor market trends.​
 

AUDUSD Analysis: Breaking Bullish Trends and Testing Fibo Level​

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Solid ECN – The U.S. dollar broke below the ascending bullish channel in yesterday's trading session against the Australian dollar. Interestingly, the pair tested the broken support, which now acts as resistance, specifically at the 50% Fibonacci level or the 0.6521 mark.

The technical indicators give mixed signals: the RSI is bearish, while the Awesome Oscillator signals a bull market.

Based on the price action, the 50% Fibonacci level plays as resistance, and it is expected for the downtrend to extend to the 78.6% Fibonacci support, followed by the February low at 0.6442.

The bearish outlook for the AUD/USD pair should be invalidated if the price stabilizes itself above the 50% Fibonacci level.​
 
Gold Price Analysis: Potential Bullish Breakout

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Solid ECN – The yellow metal is testing the $2,037 mark. What distinguishes this resistance area is its conjunction with the 61.8% Fibonacci level and the descending trendline, depicted in blue.

Upon examining the price action, we observe that the divergence in the awesome oscillator couldn't initiate a shift in the market. Consequently, the Gold price remained above the 50% Fibonacci level and the Ichimoku cloud. With the RSI indicator hovering above the 50 lines, it is likely for the price to make a bullish breakout and climb to the 78.6% Fibonacci resistance, corresponding to the $2,048 mark.

On the other hand, if the XAU/USD price dips and stabilizes below the 50% Fibonacci support, the bullish analysis will be invalidated. In such a scenario, the price might experience a further decline to the 38.2% level.​
 

USDJPY Experiences Significant Downward Momentum​

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Solid ECN – The USDJPY is experiencing significant downward momentum in today’s trading session. The pair has crossed below the Ichimoku cloud and is trading around 149.2 at the time of writing. Interestingly, the RSI indicator has entered the oversold area below 30. Therefore, considering the primary trend is bullish, the price might test the previously broken support, the Ichimoku cloud.

From a technical standpoint, the data from the USDJPY 4-hour chart indicates that the uptrend will be on pause for a while, and the decline will likely extend to the 23.6% Fibonacci support, corresponding to the 148.3 mark.

On the flip side, bulls must push the price above the Ichimoku cloud again for the uptrend to continue.​
 

Silver Prices Surge Amid US Economic Updates​

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Solid ECN – Silver's price rose above $22.5 per ounce, thanks to a weaker US dollar, as market players reacted positively to new economic data from the US. The Federal Reserve closely monitors the core PCE price index, which increased by 0.4% from January last month, aligning with analysts' predictions.

Furthermore, the year-on-year rates have hit their lowest point since 2021, reinforcing the view that inflation is staying on its expected path. In other developments, initial jobless claims were slightly higher than expected, reducing concerns over an overly tight job market. Market participants anticipate 79 basis points in Fed rate cuts in 2023, with expectations for the initial reduction in June. As borrowing costs fall, the attractiveness of non-income-generating assets like silver increases.​
 

Gold Prices Stay High Amid Steady US Inflation Data​

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Solid ECN – Gold prices remained above $2,040 an ounce last Friday, marking the second week of gains. This trend follows the latest U.S. inflation data, which met expectations and continued to support the anticipation of Federal Reserve interest rate reductions this year. The recent data revealed that core PCE prices in the U.S., an inflation measure closely watched by the Fed, increased by 0.4% month-over-month in January. This is a jump from the 0.1% rise seen in December, aligning with forecasts.

Furthermore, New York Fed President John Williams commented that he anticipates the central bank will lower interest rates later in the year, driven by decreasing inflation and a stable economy. He also mentioned that he doesn't foresee circumstances requiring another Fed rate hike.

Currently, the market anticipates roughly a two-thirds likelihood of a Fed rate reduction in June, with expectations for no changes in March and May.​
 

USDCNH Finds Support: Navigating Fibonacci Levels​

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Solid ECN – The USDCNH pair has rebounded from the strong 7.2 resistance level. Interestingly, the Ichimoku cloud further reinforces this resistance zone. The pound sterling establishes stability above the 50% Fibonacci support level against the Japanese yen.

Additionally, the Awesome Oscillator remains neutral, while the RSI suggests a continuation of the uptrend.

From a technical standpoint, the market maintains a bullish outlook as long as the price stays within the trading channel. The initial target could be set at the 78.6% Fibonacci resistance level.

Conversely, the bullish sentiment should be reconsidered if the USDCNH falls below the Ichimoku cloud or the 50% Fibonacci level.​
 

Gold Stabilizes as US Economic Concerns Mount: A Quick Overview​

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Solid ECN – On Monday, the price of gold remained steady at around $2,080 per ounce, following a nearly 2% increase the day before. This was mainly due to a fall in both the US dollar and Treasury yields, which happened in response to disappointing economic indicators from the US. Specifically, recent reports revealed that the country's manufacturing sector has been shrinking for 16 months as of February.

Additionally, a survey from the University of Michigan indicated consumer confidence last month was lower than predicted. Regarding interest rates, John Williams of the New York Fed anticipates reductions later this year, although not all officials agree to such a change. Investors are now turning their attention to upcoming events: they are eagerly awaiting Federal Reserve Chair Jerome Powell's forthcoming testimony to Congress for any signs of changes in monetary policy. They are also looking for essential updates on US employment and manufacturing activity.​
 
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