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US100

The Fed released its semi-annual monetary policy report today, and next week Powell will testify before Congress. His statement may provide some hints regarding future rate hike path and measures which may be taken during the March meeting. Highlights of the report:

Further hikes are needed

1. Financial conditions have tightened significantly since June
2. Service inflation excluding the housing sector remains elevated, further dynamics will depend on the labor market
3. Bringing inflation back to 2% likely requires period of below-trend growth, some softening of labor market conditions
4. Inflation abroad remains high, which has an impact on domestic prices
5. The labor market will remain strong for now

Today's report did not cause any major market moves, as next week's Powell semiannual testimonies is much more important. EURUSD rebounded slightly and the US100 remains at session highs.

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

If the assumption is correct, the EURUSD pair will fall to the area of 1.0500 – 1.0325. In this scenario, critical stop loss level is 1.0695.
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GBPUSD - The price is in a correction and a fall is possible.

If the assumption is correct, the GBPUSD pair will fall to the area of 1.1650 – 1.1420. In this scenario, critical stop loss level is 1.2285.
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AUDUSD

The AUDUSD pair continues to crawl positively to trade near the key resistance 0.6780, noticing that stochastic lost its positive momentum to start providing negative signals now, waiting to motivate the price to rebound bearishly and resume the correctional bearish track, which targets 0.6665 as a next station. The EMA50 continues to press negatively on the price to support the continuation of the expected bearish trend, being aware that breaching 0.6780 will complete forming positive pattern that has the ability to push the price to turn to rise and head to visit 0.6925 areas initially.
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EURJPY
The EURJPY pair failed to surpass 145.25 barrier, to force it to postpone the bullish attack and form correctional bearish rebound to touch the additional support at 144.
We expect to form mixed sideways trades between the mentioned levels, to recommend neutrality and monitoring the price behavior until surpassing one of these levels to manage to detect the next trend, noting that breaking the support will activate the correctional bearish track that might target 143.25 and 142.60 levels.

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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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EURJPY

The EURJPY pair failed to surpass 145.25 barrier, to force it to postpone the bullish attack and form correctional bearish rebound to touch the additional support at 144. We expect to form mixed sideways trades between the mentioned levels, to recommend neutrality and monitoring the price behavior until surpassing one of these levels to manage to detect the next trend, noting that breaking the support will activate the correctional bearish track that might target 143.25 and 142.60 levels.

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EURUSD

ECB's Holzmann calls for 50 BPS hikes at the next 4 meetings. In addition he would like the PEPP program to be included in the balance sheet reduction, whose maturing instruments are reinvested for the time being. In his opinion, PEPP should be "pulled" into QT in autumn. These comments are very hawkish, however Holzmann belongs to the extreme group of "ultrahawks" at the ECB. EURUSD tried to rebound slightly after Holzmann's comments.

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BTCUSD: probable bankruptcy of Silvergate Bank – the driver of the decline in crypto assets

According to most experts, the pressure on the digital assets sector was exerted by reports of the probable bankruptcy of Silvergate Bank, which actively worked with cryptocurrency firms. Last Friday, representatives of the main company Silvergate Capital Corp. announced the delay in the publication of the annual financial report for the U.S. Securities and Exchange Commission (SEC). It was also stated that the reasons for extending the audit were, in particular, accounting for losses on bonds issued at the beginning of this year. These statements aroused suspicions in the cryptocurrency community that due to a number of negative events in the market, Silvergate's capitalization could have suffered greatly, and the bank is now financially insolvent. Against this background, many digital companies hastened to distance themselves from Silvergate, stating a minimal degree of cooperation or even a break in relations. This was done, for example, by Coinbase, Paxos, Galaxy Digital, Bitstamp, Bakkt, Gemini, Tether and a number of other companies.

New financial problems of a large company associated with the cryptocurrency sector increase investors' distrust of the industry and cause a decline in prices. In addition, monetary factors may exert additional pressure on the market this week. Thus, the head of the US Fed Jerome Powell will address Congress with a semi-annual report on the activities of the regulator, and February employment data will also be published. In the event that they turn out to be strong again, officials get another argument in favor of extending the cycle of interest rate increases. Technically, the price is trying to resume serious growth, but for this the quotes will need to break above the resistance zone of 23000 - 23500 (Fibo retracement 23.6%, the middle line of the Bollinger Bands, the Murray level [7/8]). In this case, the growth targets will be 25000 (Murray level [8/8]) and 26562.5 (Murray level [+1/8]). The key for the "bears" is the level of 21875 (Murray level [6/8]), with its breakdown, the decline will continue to the level of 20312.5 (the Murray level [5/8]).

Resistance levels: 23500, 25000, 26562.5 | Support levels: 21875, 20312.5

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Dow Jones

Volatility in the US stock market increased again, reaching its peak in trading on Friday against the background of the rhetoric of a number of experts regarding possible actions by the US Federal Reserve at a meeting on March 22. The President of the Federal Reserve Bank (FRB) of Atlanta, Rafael Bostic, said that the regulator is ready for a sharper increase in the cost of borrowing than previously planned. The official's words led to a change in the balance of opinion in futures on the expected interest rate: the probability of an increase in value by 50 basis points is now estimated at 28.4% after 25% at the end of last week.

In turn, the bond market on Friday updated all-time highs: the yield on 10-year Treasuries exceeded 4% for the first time since November last year, but then a correction followed and now the figure is held at 3.944%, which contributed to the positive dynamics in the stock market. Today, auctions are scheduled for the placement of 3- and 6-month treasury bills, which may also have an impact on the stock index quotes. On the daily chart, the index quotes continue their corrective dynamics, being in the middle of the local downward channel, and the technical indicators are ready for a reversal and have almost given a new buy signal.

Support levels: 33000, 32000 | Resistance levels: 33700, 34600

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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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USDCAD

The USDCAD pair fluctuates around 1.3600 level, noticing that the price continues to record lower highs, while stochastic shows new negative overlapping signal now. Therefore, we believe that the chances valid to resume the expected bearish bias on the intraday basis, which its targets begin by breaking 1.3570 to confirm rallying towards 1.3500, reminding you that the continuation of the bearish wave depends on the price stability below 1.3630 and 1.3680 levels.

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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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DE30

European stock market indices trade higher for another day in a row. This comes in spite of a rather mixed Wall Street session yesterday and a mixed trading during the Asian session today. There is no clear reason behind the move but ECB consumer survey for January may play a role. Survey suggested that consumer inflation expectations for the next 12-months dropped from 5 to 4.9% while three-year expectations dropped from 3 to 2.5%. Moreover, growth in nominal income over the next 12 months is seen at 1.3%, up from 1.0% seen in December. This suggests that ECB could have room to be less hawkish. Nevertheless, this stands in contrast to recent comments from ECB members themselves, like for example Holzmann, who sees need for 4 more 50 bp rate hikes. Taking a look at DE30 chart at D1 interval, we can see that the index moved above a recent trading range and is making a break above the local high from early-February in the 15,700 pts area. A quick and clear break above the 15,700 pts handle may pave the way for extension of the upward impulse, and a move towards all-time highs in the 16,300 pts area.

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Gold

1. 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
2. Some banks and institutions are now seeing chance of Fed hiking rates to 6% and holding them there for a longer period of time
3. 2y-10y and 2y-30y yield curves are the most inverted in over 4 decades with both spreads exceeding -100 bps
4. 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
5. 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
6. DAX futures point to a slightly lower opening of the European cash session today
7. RBA Governor Lowe said that rate hike cycle may be paused at the next meeting if incoming data warrants it
8. OPEC Secretary General Al Ghais said that Russian oil production remains resilient
9. According to poll conducted by Reuters, majority of economists surveyed expect Bank of Japan to end yield curve control this year
10. According to Washington Post, US is preparing to lift Covid-19 travel testing restrictions for arrivals from China
11. API report pointed to a 3.83 million barrel drop in US oil inventories (exp. -0.5 mb)
12. Cryptocurrencies are pulling back today. Bitcoin and Dogecoin drop around 0.5% each while Ethereum trades flat
13. Energy commodities trade higher - oil gains 0.4-0.5% while US natural gas prices climb 0.5%
14. Precious metals trade mixed - silver drops 0.1%, gold trades flat and platinum adds 0.5%
15. 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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