2023 Market Forecast by Solid ECN

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

On the daily chart, the downward wave of the higher level А ended, and the development of the upward wave B started, within which the entry first wave of the lower level 1 of (А) of B formed. Now, a downward correction is developing as the second wave 2 of (А) of B, within which the wave a of 2 has formed, and the wave b of 2 is developing.

If the assumption is correct, the EURUSD pair will fall to the area of 1.0325 ? 1.0163. In this scenario, critical stop loss level is 1.1040.

NZDJPY

NZDJPY may be entering a volatile week. The Reserve Bank of New Zealand is scheduled to announce the next monetary policy decision on Wednesday at 1:00 am GMT. There is a lot of uncertainty around this announcement. Money markets price in around 40 basis points of tightening and majority of economists polled by Bloomberg see 50 bp rate hike as the base case scenario. However, calls for a lower hike or even a pause have been mounting recently as New Zealand is facing floods and damage from a cyclone. A decision to pause rate hikes to wait and see what damage to the economy weather has done, would be surprising and would likely trigger a pullback on NZD market.

When it comes to the JPY-side, an event to watch this week is the confirmation hearing of Kazuo Ueda in the lower house of the Japanese parliament scheduled for Friday, February 24. Ueda has been nominated to succeed Kuroda as Bank of Japan head and this week's confirmation hearing will be his first appearance since nomination. Any suggestions that the Bank of Japan may exit or roll down highly expansionary policy under his watch could trigger moves on the JPY market.



Taking a look at NZDJPY chart at D1 interval, we can see that the pair has been largely trading sideways as of late. The pair failed to break above the midpoint of the trading range in the 84.50 zone. Apart from previous price reactions, this zone is also marked with a 200-session moving average. Moves on the pair has been recently confined to the inner 82.50-84.50 range and high-volatility events scheduled for this week, especially RBNZ decision, could lead to a breakout, direction of which may determine the direction of the next big move.

EURUSD

The bullish momentum of recent months eased in February. The last sessions have been marked by some indecision in the price that ended up consolidating.



On the dollar index chart, we can see that there may be room for further declines in the dollar. Friday's daily candle rejected the 200-period EMA and if the price moves back below the 200- and 50-period EMAs, then the EUR could gain against US Dollar weakness.



AUD leads the gains this trading session.

USDJPY - Growth is possible.

On the daily chart, the third wave of the higher level 3 of (1) formed, a downward correction ended as the fourth wave 4 of (1), and the fifth wave 5 of (1) develops. Now, the first wave of the lower level i of 5 is forming, within which the wave (iii) of i is developing.

If the assumption is correct, the USDJPY pair will grow to the area of 138.20 ? 142.17. In this scenario, critical stop loss level is 129.64.

NZDUSD

New Zealand dollar is the top performing G10 currency today. Strength of NZD is driven by the rate hike announced by the Reserve Bank of New Zealand earlier today. RBNZ delivered a 50 basis point rate hike. While the decision was in-line with expectations of most economists, there were some concerns that RBNZ may decide to slow the pace of tightening following a recent hit from cyclone Gabrielle.

RBNZ Governor Orr said that there was barely any consideration for a 25 basis point rate hike as it is too early to determine impact of cyclone hit and that discussion was centered around a 50 bp rate move.  RBNZ Chief Economist said that cyclone hit boosts demand for labor but it is possible that the build-back programmed will exert upward pressure on inflation. Minutes showed that discussion was whether to hike rates by 50 or by 75 basis points. Ultimately, the official cash rate was increased by 50 bp to 4.75% - the highest level since late-2022. Moreover, the peak rate forecast was confirmed at 5.5% and it is expected to be reached Q1 2024. Interestingly, the cash rate forecast for June 2023 was cut from 5.4 to around 5.15%. While RBNZ sees need for more tightening ahead, it should also be said that Governor Orr noted that the Bank is still expecting recession in New Zealand in a 9-12 months period.



Taking a look at NZDUSD chart at D1 interval, we can see that the pair has recently pulled back and tested the lower limit of a trading range in the 0.6200 area. A 50 bp RBNZ rate hike today helped the pair bounce off the 0.62 handle and while initially it looked like a recovery move may be launched, gain started to be erased as USD regained ground.

AUDUSD - A fall is possible.

If the assumption is correct, the AUDUSD pair will fall to the area of 0.6645 ? 0.6524. In this scenario, critical stop loss level is 0.7008.

XRPUSD

Last week, the XRPUSD pair attempted to grow within the framework of the general market trend and tested the upper limit of the Murray trading range, supported by the middle line of the Bollinger Bands in the area of 0.3906.



Quotes have not yet managed to consolidate above this level, but if successful, the upward dynamics will be able to continue to the levels of 0.4150 (Murray level [+1/8]), 0.4330 (Fibo retracement 23.6%). The key for the "bears" is the 0.3662 level (Murray level [1/8], the middle line of the Bollinger Bands), consolidation below it will give the prospect of the price returning to the area of 0.3418 (Murray level [6/8]), 0.3174 (Murray level [5/8]).

Resistance levels: 0.3906, 0.4150, 0.4330 | Support levels: 0.3662, 0.3418, 0.3174

US500 Fell Slightly after Minutes

Markets unimpressed by latest FOMC minutes

Minutes from the latest FOMC meeting were hawkish but investors were expecting this narrative. The document did not present many new information regarding further steps that the FED intends to take regarding fiscal policy. Almost all FOMC participants agreed that it was appropriate to raise the target range for the federal funds rate by 25bps at the first monetary policy meeting of 2023, although a few officials favored raising it by 50bps. Minutes release taking into account hawkish tone led to small pullback on equity markets and appreciation of USD dollar.

Below you can find key takeaways from the document:

• A few participants favored raising rates by 50 basis points
• Several participants advocated raising interest rates by 50 basis points.
• Some participants predicted an increase in the likelihood of a recession in 2023.
• Participants stated that the continued tight job market would contribute upward pressure to inflation.
• Participants said that inflation in last three months has eased, but they need to see more progress.
• All participants agreed more rate hikes needed to achieve federal open market committee's job, inflation objectives.
• Upside risks for inflation, including China's economic reopening and Russia's war in Ukraine.

US500 pulled back slightly after today's Minutes, however continues to trade above major support at 4000 pts.