4 Global Market Updates- 24 February, 2023

In this article, we have covered the highlights of global market news about the EUR/USD, AUD/USD, NZD/USD and GBP/USD.

Before the Fed’s favored inflation indicator, the EUR/USD maintained control around 1.0600.

After a corrective recovery from a multi-day bottom that positioned the four-day decline to early Friday am in Asia, EUR/USD has maintained its lower ground at 1.0600. The leading currency pair explains the US Dollar’s general strength in the face of encouraging US statistics.

The EUR/USD pair’s daily chart reveals that it has lost ground for four days in a row and is now trading below the 1.0745 level, which marks the 61.8% Fibonacci retracement of the 2022 dip. In the event of another step south, the 50% retracement offers crucial support, which is at 1.0515. The 20 Simple Moving Average (SMA), which also moves powerfully south over the present level, simultaneously converges with the previously indicated Fibonacci barrier. Meanwhile, technical indicators maintain low levels with inconsistent directional strength. Although the Relative Strength Index (RSI) is solidly headed south, close to oversold values, the Momentum is heading north with little strength.

The 4-hour chart indicates the probability of a harmful extension in the short future. The 20 SMA serves as immediate resistance at about 1.0640 as the pair has accelerated its decline below bearish moving averages. Meanwhile, the Fibonacci barrier is being crossed below the 100 SMA, and technical indicators have decreased again inside harmful levels.

Levels of support: 1.0560 1.0515 1.0470

Levels of resistance: 1.0640 1.0695 1.0745

The EUR/USD pair dropped below the 1.0600 barriers on Thursday, reaching levels last seen at the start of the year. The loss was brought on by widespread US Dollar demand, which took a brief break throughout the European session as local share markets struggled to counter the negative market sentiment.

Nevertheless, with the publication of mixed US data, Wall Street started to slump again, with critical indices hitting new monthly lows. On the one hand, the nation’s annualized growth rate was downgraded from 2.9% in the last quarter of 2022 to 2.7% in that quarter. Yet, despite a 3.7% QoQ increase in personal consumption expenditure prices and a 4.3% increase in core inflation above the 3.9% increase from the third quarter of 2022, inflationary pressures at the same time were more substantial than initially anticipated. The data spurred even more rumors that the US Federal Reserve would keep raising rates at its forthcoming meetings, although a possible change in monetary policy is still some time off.

The Harmonized Index of Consumer Prices (HICP) for January was verified to have increased by 8.6% YoY in the Euro Zone’s final estimate, which was released. Nevertheless, the earlier estimate for the core reading of 5.2% was revised to 5.3%.

The GFK Consumer Confidence Survey and the second estimate of the German Q4 GDP will both be released on Friday. The January Personal Consumption Expenditures Price Index, the Federal Reserve’s preferred inflation indicator, will be released by the United States. The PCE Price Index is anticipated to have increased by 4.9% YoY in January, slowing from the previous 5% gain. The more important core PCE Price Index is anticipated to have increased by 4.3% after increasing by 4.4% in December. The numbers could lead to some erratic FX market responses.

AUD/USD bulls are under pressure as they watch for a breach of 0.6820s

AUD/USD The bears are in charge and challenging the bull’s commitments at last week’s lows. They entered the market with 0.6750 in mind, while last month’s lows are still an opposing goal on the road to a test of 0.6700.

AUD/USD is declining for the second day and is trading just over the monthly low. The daily chart somewhat recovered from the 200 SMA’s slight bearishness. The pair also deepened its decline under the 20 SMA, which is currently bearish and indicates a downward extension. Technical indicators, still in negative territory and at multi-month lows, also indicate that lower lows are imminent.

The short-term outlook on the 4-hour chart is negative. The 20 SMA holds directionlessly at 0.6870, while the 100 SMA still trades above it with a downward slope. The AUD/USD trades substantially below its moving averages. Technical indicators remain in the red, with the Momentum moving lower and the Relative Strength Index (RSI) settling at 34, indicating no buying activity.

Levels of support: 0.6795 0.6750 0.06710

Levels of resistance: 0.6850, 0.6900, and 6945

NZD/USD Price Analysis: Conflicts with 0.6190 support and 200-day EMA

• NZD/USD fails to maintain two-day rebound movements after being neglected recently.
• The 200-day EMA is guarded by a declining resistance line that has been in place for three weeks.
• In the midst of negative MACD indications and virtually oversold RSI circumstances, the horizontal region from early January looks to be a significant support to monitor.
• The two-day winning run for NZD/USD is still on the defensive at 0.6230 on Friday during the Asian session. As a result, the Kiwi pair grinds along inside a significant trading range among a variety of oscillators.

That said, the quotation is now battling a downward-sloping resistance line from February 2 that is close to 0.6250 as of the time of this writing, while the MACD signal is bearish and the RSI (14) line oscillates around the oversold region.

The same indicates that the bearish bias is still there and that there isn’t much opportunity for further decline.

So, the main location for the NZD/USD bears to monitor during the quote’s continued decline looks to be the horizontal support area near 0.6190, which has been in place for seven weeks.

It’s important to keep in mind that the Kiwi pair’s decline below 0.6190 might aim for 0.6100, while any further decline would require confirmation from the swing low around 0.6060 in mid-November before prodding the 0.6000 level.

The 200-day Exponential Moving Average (EMA) level around 0.6275 must be crossed, however, for a daily close above the aforementioned three-week-old resistance line to persuade NZD/USD investors. In such situation, it is possible that the price may rise toward the high set on February 14 around 0.6390.

NZD/USD is most likely to continue trending down, but 0.6190 must confirm the fall.

Before the release of US PCE Inflation, the GBP/USD pair finds interest around 1.2000.

• GBP/USD is trading at approximately 1.2000, but a decline is probable given the current global unrest.
• If US PCE inflation shows indications of improvement, the Dollar Index may continue to rise.
• Since she is concerned about the prolonged persistence of inflation, BoE Mann has backed more policy tightening.
• In the early Asian session, the GBP/USD pair saw a buying activity of around 1.2000. Notwithstanding the market players’ lackluster willingness to take risks, Cable has seen a little comeback. The Pound Sterling’s recovery move should be seen as a retreat for the time being since the bearish bias is still there due to global issues.

While US President Joe Biden seems optimistic that China and Russia would sign an arms agreement to back Moscow in its conflict with Ukraine, S&P500 futures have given up some of their gains. According to the Wall Street Journal, the Biden administration is thinking about publicizing information that shows China is debating whether to provide weapons to back Russia’s fight in Ukraine.

Previously, US Secretary of State Antony Blinken expressed concern that “China is seriously examining sending armaments to Russia” in an interview with CBS News.

Global markets may come under intense pressure in the following months as central banks continue to tighten their policies to fight sticky inflation. Feb 10-22 More than 150 strategists, analysts, and fund managers who cover 17 worldwide stock indexes were surveyed by Reuters. The results showed that 56% anticipated a local market correction over the next three months. Investors should prepare for extreme volatility as a result.

The US Dollar Index (DXY) has lost some of its gains and is now hovering around 104.20. Before the United States Core Personal Consumption Expenditure (PCE) Price Index data are released, the Dollar Index is anticipated to stay volatile. Annually, the economic statistics are higher at 4.3% compared to the previous report of 4.4%. In comparison to the 0.3% previously reported, the monthly data is predicted to increase by 0.4%. In addition, 1.3% growth is predicted for January’s spending, as opposed to a 0.2% decline.

In the UK, Bank of England (BoE) policymaker Catherine Mann has said that the central bank should still consider rates to have peaked since inflation is still in double digits after raising rates to 4%. A BoE policymaker is concerned about inflation’s prolonged persistence and feels that more tightening is necessary but that a pivot is still being prepared to occur.

Please click here for the Market News Updates from 23 February, 2023.