official Market Update by Solidecn.com

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AUDUSD

AUDUSD is one of the pairs that may see some moves in the coming hours and days. The pair took a hit at the launch of this week's trading as China set a rather disappointing 2023 GDP growth target of 'around 5%'. This is because trading AUDUSD is often seen as a proxy China trade due to the Australian economy being highly dependent on demand from China, especially for its commodities. 

The pair will likely also see some moves during the coming Asian session as the Reserve Bank of Australia is set to announce a monetary policy decision on Tuesday, 3:30 am GMT. Market expects a 25 basis point rate hike, to 3.60%. If confirmed, this would mark the fifth consecutive 25 basis point rate hike. Statement accompanying the latest decision noted that the RBA Board sees further rate hikes as appropriate and minutes from the latest meeting even showed that discussions were whether to hike by 25 or 50 bp. While a 25 bp rate hike looks like a done deal at a meeting tomorrow, a lot of attention will be paid to guidance and whether the RBA remains on a hawkish path.

When it comes to the US dollar, the currency may become more volatile on Tuesday and Wednesday when Fed Chair Powell delivers his semiannual testimony to Congress (3:00 pm GMT on both days, text release around 1:30 pm GMT on Tuesday). However, as Powell's speeches will come ahead of key US macro data, like NFP this Friday or CPI next week, it is widely expected that Powell will stick to his previous messaging and will not deliver any surprises.

Taking a look at AUDUSD chart at D1 interval, we can see that the pair has been attempted to make a break below the 38.2% retracement of the downward move launched in April 2022 for a few days. No such break occurred yet but it cannot be ruled out, especially if RBA surprises with a dovish message, like for example hinting that rates are close to peak. On the other hand, defending this area would be a strong bullish signal and could pave the way for a recovery towards 50% retracement in the 0.6900 area. 
 

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GBPJPY

The GBPJPY pair provided more negative closings below the key resistance 165.10, forming some negative waves to settle near 163.25, confirming its surrender to the previously suggested bearish bias domination.

Now, stochastic approach to 20 level allows us to keep the negative overview, to expect forming new negative waves and move towards the negative target at 162.25, while breaking to might extend losses towards 161.40 direct.
 

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CAC40

French CAC40 index is trading 0.4% higher on Monday around fresh all-time high, boosted by gains in luxury stocks such as LVMH (MC.FR) , Kering (KER.FR) and Hermes (RMS.FR) as traders digested fresh comments from ECB chief economist Lane, who pointed out that rates should raise not only in March but also in May. On the data front, S&P Global France Construction PMI dropped to 45.2 in February from 48.4 in January, which was a ninth straight monthly decline of the French construction sector. Upward move is rather limited as markets brace themselves for tomorrow’s highly-anticipated FED Chair Powell's testimony and the February NFP data on Friday. 

From a technical point of view, the FRA40 rose over 30.0% from September lows and is currently testing record high at 7400 pts, however hidden bearish divergence appeared on the Momentum indicator, which indicates that the recent upward rally may be losing steam. If sellers manage to regain control, downward impulse may be launched towards support at 6515 pts which coincides with 23.6% Fibonacci retracement of the upward wave launched in March 2020.
 

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GBPCAD

The GBPCAD pair confirmed its affection by the domination of the correctional bullish bias by moving away from 1.6060 support line and forming strong positive waves, to notice its consolidation near 1.6390 level, also, the moving average 55 fluctuation below the current price will increase the chances of resuming the correctional bullish trend, to assist to renew the pressure on 1.6510 barrier.

 

 

Note that succeeding to breach the targeted level will confirm moving to new bullish track to start recording additional gains that might extend towards 1.6625 followed by reaching 1.6750.

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GBPUSD

The tight range dominates the GBPUSD pair’s trades since yesterday, keeping its stability above the breached resistance of the correctional bearish channel, thus, no change to the expected bullish trend for the upcoming period, which its next target located at 1.2145.

 

 

Note that the continuation of the bullish wave depends on the price stability above 1.1990 and the most important above 1.1940.

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Gold

Gold price retested the breached neckline of the inverted head and shoulders’ pattern and keeps its stability above it, to start providing positive trades in attempt to move away from this level that represents key support at 1843.70, to keep the bullish trend scenario valid and active for the upcoming period, which targets testing 1878.80 mainly.

 

 

Stochastic shows clear positive signals now, while the EMA50 continues to provide the positive support to the price, to get positive motives that we are waiting to assist to push the price to achieve the waited rise. On the other hand, we should note that breaking 1843.70 followed by 1828.70 levels will stop the expected bullish trend and push the price to return to the correctional bearish track again.

 

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AUDUSD

AUDUSD is pulling back as today's RBA statement was seen as less hawkish than the last time. The pair is attempting to make a break below the support zone marked with 200-session moving average (purple line) and a 38.2% retracement of the downward move launched in April-2022.

 

 

 

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Gold

• US indices finished yesterday's trading significantly lower following a hawkish testimony from Fed Chair Powell. Powell hinted that Fed is ready to accelerate rate hikes if situation requires it
• Some banks and institutions are now seeing chance of Fed hiking rates to 6% and holding them there for a longer period of time
• 2y-10y and 2y-30y yield curves are the most inverted in over 4 decades with both spreads exceeding -100 bps
• S&P 500 dropped 1.53%, Dow Jones moved 1.72% lower and Nasdaq declined 1.25%. Small-cap Russell 2000 traded 1.11% lower
• Indices from Asia-Pacific traded mostly lower today. S&P/ASX 200 dropped 0.8%, Kospi plunged 1.3%, Nifty 50 dipped 0.5% and indices from China traded 0.3-2.3% lower. Nikkei was outperformer and managed to finished 0.5% higher
• DAX futures point to a slightly lower opening of the European cash session today
• RBA Governor Lowe said that rate hike cycle may be paused at the next meeting if incoming data warrants it
• OPEC Secretary General Al Ghais said that Russian oil production remains resilient
• According to poll conducted by Reuters, majority of economists surveyed expect Bank of Japan to end yield curve control this year
• According to Washington Post, US is preparing to lift Covid-19 travel testing restrictions for arrivals from China
• API report pointed to a 3.83 million barrel drop in US oil inventories (exp. -0.5 mb)
• Cryptocurrencies are pulling back today. Bitcoin and Dogecoin drop around 0.5% each while Ethereum trades flat
• Energy commodities trade higher - oil gains 0.4-0.5% while US natural gas prices climb 0.5%
• Precious metals trade mixed - silver drops 0.1%, gold trades flat and platinum adds 0.5%
• AUD and USD are the best performing major currencies while JPY and CHF lag the most

 

 

GOLD took a hit yesterday on hawkish Powell testimony and plunged around 2%. Precious metal erased most of the gains made over the previous week and is once again trading near the support zone ranging above $1,800 mark.

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EURGBP

The EURGBP pair succeeded to renew the positive attempts by rallying above the additional support at 0.8795 recently, achieving big gains by moving towards the additional barrier 0.8925.

 

 

Now, the continuous positive momentum coming by the major indicators allows us to wait to confirm breaching the current barrier to open the way to target more positive stations, to expect moving towards 0.8955 soon, followed by attempting to touch the next main target at 0.9000.

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USDCAD

USDCAD is one of the pairs that will be on watch this afternoon. There is a number of events scheduled that could move the pair. ADP employment report for February at 1:15 pm GMT will be the first one of these and it will also be the final hint ahead of Friday's NFP report. ADP release will be followed by trade balance data for January from US and Canada at 1:15 pm GMT. However, the biggest USDCAD volatility today is expected around 3:00 pm GMT when Powell holds the second day of his semi-annual testimonies and Bank of Canada announces rate decision.

While speech from Powell and BoC rate decision are key events of the day, traders should keep in mind that there is also risk that they will turn out to be non-events. Powell will deliver the same speech as he did yesterday and the only thing that may differ are questions from lawmakers. Meanwhile, the Bank of Canada is expected to live up to its pledge of pausing rate hike cycle and leave rate unchanged at a meeting today.

Taking a look at USDCAD chart at H4 interval, we can see that the pair has been trading in an upward channel recently. The pair reached the highest level since early-November 2022 but the upward move slowed today as investors seem to be in wait-and-see mode ahead of USDCAD volatility events later in the day. As Powell is unlikely to make any major statements we have not heard during the first day of testimonies, surprise from Bank of Canada could be a massive volatility trigger. However, BoC has been quite clear about a plan to pause rate hike and failing to do so could have a negative impact on its credibility. Not to mention that situation in the Canadian economy did not change too much from the previous meeting.
 

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AUDUSD

The AUDUSD pair broke 0.6665 level strongly to rally bearishly and approach the second waited target at 0.6550, moving within the bearish channel that supports the chances of surpassing the mentioned level and open the way to achieve more bearish correction, to head towards 0.6400 areas as a next main station.

 

 

The EMA50 continues to support the suggested bearish wave, waiting to get negative momentum that assists to achieve the required break and head towards the expected target. On the other hand, we should note that breaching 0.6665 will stop the expected decline and lead the price to start recovery attempts that target testing 0.6780 areas initially.

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Oil

Crude oil price faced strong negative pressure yesterday, as it broke 78.90 level and decline to retest the neckline of the inverted head and shoulders’ pattern that forms solid support at 77.40, noticing that the price leaned on the support line that appears on the chart to start providing positive trades that makes us suggest witnessing bullish bias in the upcoming sessions, targeting testing 78.90 areas initially.

Therefore, the bullish trend will be expected for today, supported by stochastic positivity, and breaching the targeted level will push the price to achieve additional gains that reach 80.40, being aware that breaking 77.40 followed by 77.05 levels will stop the expected rise and press on the price to suffer more losses on the intraday basis.
 

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USDCAD - Growth is possible

 

If the assumption is correct, the USDCAD pair will grow to the area of 1.3850 – 1.3977. In this scenario, critical stop loss level is 1.3554.

 

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USDCHF -Growth is possible.

If the assumption is correct, the USDCHF pair will grow to the area of 0.9600 – 0.9819. In this scenario, critical stop loss level is 0.9287.

 

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EURUSD

The EURUSD pair didn’t show any strong move yesterday, to settle near 1.0515, noticing that stochastic begins to lose the positive momentum gradually, while the EMA50 forms negative pressure against the price.

Therefore, we will continue to suggest the bearish trend for the upcoming period, and the targets begin by breaking the mentioned level to confirm heading towards 1.0440 as a next negative station, noting that breaching 1.0635 will stop the expected decline and lead the price to turn to rise.
 

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Economic Calendar 

• European indices launch session flat
• Jobless claims and US natural gas storage report
• Market odds for 50 bp FOMC rate hike in March drop

European stock market indices launched today's cash trading session little changed compared to yesterday' closing levels. This comes after a mixed trading on Wall Street yesterday and in Asia today. Powell said during the second of his congressional semiannual hearings that while inflation is dropping, it will stay elevated for some time and recent policy moves are yet to impact real economy. Those comments made market odds for a 50 bp rate hike at the next FOMC meeting drop.

Economic calendar for the day ahead is light, allowing investors to catch a breath after Powell and before the NFP report. Weekly jobless claims data and EIA natural gas storage report are the only noteworthy readings scheduled for today. While jobless claims data is unlikely to trigger any major moves, EIA report may trigger some NATGAS volatility. Speeches from central bankers may offer some FX volatility in the afternoon.

1:30 pm GMT - US, jobless claims. Expected: 195k. Previous: 190k
3:30 pm GMT - EIA report on US natural gas storage. Expected: -76 bcf. Previous: -81 bcf

Central bankers' speeches

• 1:15 pm GMT - BoE Breeden
• 3:00 pm GMT - Fed Barr
• 2:00 pm GMT - NBP Chairman Glapiński
• 6:45 pm GMT - BoC Rogers
   

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GBPUSD

The GBPUSD pair fluctuates around 1.0840 level since yesterday, and continues to move within the correctional bearish channel, waiting to resume the bearish bias that its next main target located at 1.1625, supported by stochastic loss to the positive momentum clearly.

 

 

By taking a deeper look at the chart, we find that the price completed forming double top pattern that hast negative targets that surpass the above mentioned level to reach 1.1370 areas, to suggest the domination of the bearish trend on the longer term basis. Therefore, we are waiting for more decline in the upcoming sessions, supported by the negative pressure formed by the EMA50, reminding you that it is important to hold below 1.1940 to achieve the waited targets.

 

 

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EURJPY

The EURJPY pair didn’t succeed to exit the sideways range until this moment, to keep fluctuating between 145.5 resistance and 144 support.

 

 

The above chart shows that stochastic begins to provide the negative momentum, to increase the chances of forming new negative waves, and expect to crawl below the current support to reach many negative stations that might start at 143.25 followed by 142.2, to press on the moving average 55.

 

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USDCHF

The USDCHF pair traded with clear negativity yesterday, and ended trades near 0.9316, noticing that the price begins today with additional negativity to attack this level and attempt to confirm breaking it, which makes us prefer to stay aside until we get clearer signal for the next trend, through monitoring the price behavior according to the mentioned level.

Note that confirming breaking the mentioned support will press on the price to achieve more decline and return to the main bearish track, to head towards achieving negative targets that start at 0.9220 and extend to 0.9135, while consolidating above it will lead the price to resume the correctional bullish track that its next main target located at 0.9475.
 

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NATGAS

The US Energy Information Administration reported today that domestic supplies of natural gas decreased by-84  billion cubic feet for the week ended February 24 from -81 bcf in the previous week, while analysts’ expected drop  of -80 billion cubic feet. 

 

 

Still, it is much less than a decrease of 126 bcf in the same week last year and a five-year (2018-2022) average decline of 101 bcf as mild weather kept heating demand for the fuel low. Last week's decrease cut stockpiles to 2.030 trillion cubic feet (tcf), 493 bcf higher than last year at this time and 359 bcf above the five-year average of 1.671 tcf.