2023 Market Forecast by Solid ECN

[SOLID ECN LLC]

EURUSD​

The most popular currency moved higher on Wednesday morning following a set of hawkish comments from ECB President Lagarde. In her opinion policymakers are neither committed to raise further nor are yet finished with hiking rates. ECB does not see clear evidence that underlying inflation is trending downwards. The underlying inflation dynamics remain strong. Lagarde emphasized that the ECB is ready to act and provide liquidity support.

EURUSD jumped above major resistance at 1.0765 following Lagarde comments, which paves the way towards net key resistance at 1.0900. This level coincides with 50.0% Fibonacci retracement of the downward wave started in June 2021.​

 

[SOLID ECN LLC]

Oil​

Publication of report from the US Department of Energy caused some moves on the oil market. Crude inventories jumped unexpectedly while gasoline and distillate stockpiles dropped more than expected.​

• Oil inventories: +1.117mb vs -1.565 mb expected (API: +3.262 mb)​
• Gasoline inventories: -6.4 mb vs -1.677 mb (API: -1.09 mb)​
• Distillate inventories: -3.313 mb vs -1.5 mb (API: -1.84 mb)​
• Oil inventories at Cushing, Oklahoma: - 1.063 million barrels vs -1.558 million barrels previously​

WTI Crude Oil (OIL.WTI) price bounced off local upward trendline and is testing resistance at $70.15.​

 

[SOLID ECN LLC]

EURUSD​

• The Fed decision was as usual the most important macro event of the day. Federal Reserve decided to raise rates by 25 basis points as expected.​
• The Fed left the QT programme unchanged, but kept the forward rate forecast at 5.1% unchanged.​
• The Fed's change in communication is linked to problems in the banking sector. The Fed acknowledges that the tightening of credit conditions acts as a tightening of monetary conditions.​
• But reducing interest rates this year is not probable and more interest hikes from the Fed may be appropriate;​
• However, the Fed rules out interest rate cuts this year. The Fed believes that current policy is appropriate. This could mean a final hike in May;​
• In the Fed's view, current liquidity measures are sufficient. The banking system is resilient and there is no widespread problem in the system​
• In response, we saw a marked weakening of the US dollar. EURUSD rose to the 1.0900 level. In contrast, we saw strong gains on Wall Street. The US100 clearly broke through 13000 points and the US500 breached 4050 points​
• Crude oil stocks rose by 1.12 million brk on expectations of a decline of 1.4 million brk. Oil gained more than 2 per cent today, making up for recent losses in oil due to uncertainty. WTI returns above $70 per barrel​
• OPEC+ is not expected to consider major oil production cuts, despite recent strong price falls​
• UK inflation came in higher than expected at 10.4%, resulting in a marked strengthening of the pound since the start of today's session​
• A weaker dollar in the wake of the Fed's actions caused gold prices to rebound towards US$1,970 per ounce​
• The euro received support from rumours that the ECB is thought to believe that recent stability measures for the banking sector should provide a basis for further hikes. Lagarde, on the other hand, spoke of the ECB not being compelled to both hike and cut or keep rates unchanged.​

EURUSD tested the 1.0900 area against expectations of a near-term hike in the US. Source: xStation5​

 

[SOLID ECN LLC]

US30​

The dynamic declines on Wall Street initiated during the latter part of today's session were abruptly reversed by US Treasury Secretary Janet Yellen, who stated that she would provide additional deposit support if needed. Yellen added that anti-contagion tools may be applied again. Strong actions are to be taken to ensure deposits are safe. Stock indices rebounded dynamically after the new statement.

 

[SOLID ECN LLC]

BTC Retests 9-Month Highs​

Cryptocurrencies are gaining along with the major indices on Wall Street. Concerns about the banking crisis have eased somewhat, with investors finally taking a positive view of Fed Chairman Powell's comments yesterday. The rally continues despite news of an investigation into Justin Sun, the creator of the Tron blockchain, and subsequent fines targeting celebrities who promoted his cryptocurrency. The largest crypto exchange in the US, Coinbase (COIN.US), has received a so-called Wells notice evidencing possible enforcement and irregularities identified by the SEC regarding the assets and services offered on the platform.​

• The SEC maintains that all cryptocurrencies except Bitcoin are securities, while the Coinbase exchange has announced a confrontation with the regulator in court. At the time of Binance US's acquisition of the assets of bankrupt Voyager, a judge dismissed the SEC's request to halt the transaction;​
• He pointed to the unclear regulation of the industry and the incompatibility of the SEC and CFTC regulators towards what cryptocurrencies de facto are. The industry read the position as a possible preliminary precedent for wins against the SEC in other court cases. However, the bullish sentiment faded somewhat after a broader announcement from the US Securities Exchange Commission, which warned against the crypto market;​
• SEC maintains that entities that offer cryptocurrency trading may not be operating in accordance with US law. Despite these comments, shares of the Coinbase (COIN.US) exchange managed to erase some of the losses, although still losing nearly 11%. A general increase in risk appetite is supporting the quotations of the largest cryptocurrency.​

Bitcoin, M30 interval. The price of the main cryptocurrency rebounded from the 23.6 Fibonacci retracement of the upward wave started on 10 March and the SMA100 and SMA200 averages. It has thus resumed the bullish momentum and is testing the previous resistance near 28,500 USD. Overcoming 28,800 USD could open the way for the bulls to rally towards 30,000 USD.​

 

[SOLID ECN LLC]

EURUSD​

France, PMI indices for March.​

• Manufacturing. Actual: 47.7. Expected: 48; Previous: 47.4​
• Services. Actual: 55.5. Expected: 52.4 Previous: 53.1​

Germany, PMI indices for March.​

• Manufacturing. Actual: 44.4. Expected: 47 Previous: 46.3​
• Services. Actual: 53.9. Expected: 51.0 Previous: 50.9​

Although industrial data remain under pressure, the Composite index surprises the consensus on the upside. Let's remember that services are responsible for most of Europe's GDP.

The EURUSD pair extends declines after a reading of PMI data from major EU economies. The combined reading for the Eurozone will be known at 10:00 am GMT.​

 

[SOLID ECN LLC]

DE 30​

• Indices from Asia-Pacific launched new week's trading mixed - Nikkei traded 0.4% higher, S&P/ASX 200 moved 0.1% higher, Kospi dropped 0.2% and Nifty 50 added 0.2%. Indices from China traded 0.2-0.8% lower​
• Major European and US index futures are trading over 1% above Friday's cash closing prices​
• DAX futures trade almost 300 points, or around 2%, above Friday's cash close while S&P 500 futures 50 points higher, or around 1.2%​
• Silicon Valley Bank was sold to First Citizens with around $72 billion worth of assets being purchased at a $16.5 billion discount as part of the deal. All deposits assumed by First Citizens will be insured by FDIC up to the insurance limit​
• First Citizens will also receive a line of credit from FDIC for unforseen liquidity events​
• Russian President Putin announced that Russia will station tactical nuclear weapons in Belarus in response to Western countries increasing military support to Ukraine, especially UK providing Ukraine with depleted uranium ammunition​
• ECB Schnabel noted that headline inflation began to fall, but core gauges are more sticky. She said that financial stress have so far been limited mainly to financial markets​
• Fed Kashkari said that ongoing banking sector stress could bring the US closer to recession by triggering a credit crunch. However, he has noted that deposit outflow from smaller US banks have slowed and that confidence is being restored​
• According to Reuters report, Russia is considering extending limits of fertilizer exports by another six months, until November​
• Riksbank Governor Thedeen said that inflation is developing worse than it was previously thought and that another rate hike in April may be needed​
• Cryptocurrencies are trading higher at the beginning of a new week - Bitcoin gains 1.4%, Ethereum trades 1.3% higher and Ripple jumps 1.7%. Dogecoin lags and drops 0.2%​
• Energy commodities trade mixed - oil gains 0.6% while US natural gas prices drop 1.2%​
• Precious metals are pulling back - gold drops 0.3%, silver trades 0.8% lower while platinum and palladium dip around 0.1% each​
• EUR and AUD are the best performing major currencies while JPY and NZD lag the most​

Futures markets point to a positive opening of a new week in Europe with German DAX futures (DE30) trading almost 300 points above Friday's cash close. Index is attempting to break above a mid-term resistance in the 15,250 pts area.​

 

[SOLID ECN LLC]

NOVN.CH

The shares of Swiss company Novartis (NOVN.CH) are gaining more than 5 per cent early in today's session on the back of successful clinical trials of the drug Kisqali, which helps in the fight against breast cancer.

As detailed studies have shown, the drug can prevent recurrence in a broad population and extends life expectancy for patients facing cancer. As Jefferies analysts added - "The data suggest that the treatment can reduce the risk of the cancer returning after several years without a negative change in quality of life. The broad patient population that could benefit from the drug opens up a market of nearly $6bn for Novartis."

Positive trial results are likely to benefit the company's financial performance and increase consensus over the longer term.

The company's shares are currently testing a zone of resistance defined by the confluence of the 50-, 100- and 200-day exponential moving averages.​

 

[SOLID ECN LLC]

EURUSD

EURUSD is struggling to find a direction at the beginning of a new week. The main currency pair is trading little changed on the day even in spite of a decent beat in German Ifo indices for March. Headline Ifo index jumped from 91.1 to 93.3 (exp. 91.0). This beat was driven mostly by a jump in expectations subindex from 88.5 to 91.2 (exp. 88.3). Nevertheless, EUR stayed fairly muted following the release. A number of ECB speakers scheduled for today may provide some volatility on EUR-related FX pairs later into the day. However, euro and other European assets are expected to get more volatile in the second half of the week as flash CPI data from the Old Continent will be released. German reading on Thursday, 1:00 pm BST and French reading on Friday, 7:45 am BST will be the most closely watched ones. Both are expected to show significant deceleration.

Taking a look at EURUSD chart at H4 interval, we can see that the pair halted the recent drop at the 50-period moving average (green line) near 38.2% retracement of the downward impulse launched at the beginning of February. However, subsequent rebound was halted today at the resistance zone marked with 50% retracement and the pair has struggled to determine direction for the next move since. A failure to break above could lead to a retest of the aforementioned 38.2% retracement in the 1.0710 area. On the other hand, a break above would pave the way for a test of swing levels marked with 61.8 and 78.6% retracements in 1.0830 and 1.0920 areas, respectively.​

 

[SOLID ECN LLC]

EURUSD

EURUSD is struggling to find a direction at the beginning of a new week. The main currency pair is trading little changed on the day even in spite of a decent beat in German Ifo indices for March. Headline Ifo index jumped from 91.1 to 93.3 (exp. 91.0). This beat was driven mostly by a jump in expectations subindex from 88.5 to 91.2 (exp. 88.3). Nevertheless, EUR stayed fairly muted following the release. A number of ECB speakers scheduled for today may provide some volatility on EUR-related FX pairs later into the day. However, euro and other European assets are expected to get more volatile in the second half of the week as flash CPI data from the Old Continent will be released. German reading on Thursday, 1:00 pm BST and French reading on Friday, 7:45 am BST will be the most closely watched ones. Both are expected to show significant deceleration.

Taking a look at EURUSD chart at H4 interval, we can see that the pair halted the recent drop at the 50-period moving average (green line) near 38.2% retracement of the downward impulse launched at the beginning of February. However, subsequent rebound was halted today at the resistance zone marked with 50% retracement and the pair has struggled to determine direction for the next move since. A failure to break above could lead to a retest of the aforementioned 38.2% retracement in the 1.0710 area. On the other hand, a break above would pave the way for a test of swing levels marked with 61.8 and 78.6% retracements in 1.0830 and 1.0920 areas, respectively.​