2023 Market Forecast by SolidECN

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Euro Climbs: What Traders Need to Know​

Solid ECN – The Euro climbed above $1.085, marking its highest point in five weeks. This rise comes as traders anticipate changes in monetary policies between the US and Europe.

The European Central Bank (ECB) is expected to cut interest rates at its meeting on June 6. Market predictions suggest a potential decrease of around 70 basis points over the year. This expectation has contributed to the Euro's recent strength.

There is growing speculation in the US that the Federal Reserve will cut rates this year. This follows a slowdown in core inflation in April, the first in six months. If the Fed does cut rates, it could further influence forex markets.

Recent GDP data showed that the Euro Area has exited recession in the first quarter. The European Commission's latest forecasts indicate a steady economic path ahead. This positive outlook supports the Euro's strength and adds confidence for investors.​

 

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USD/JPY​

The USDJPY traded at about 155.3 in today's trading session, which is inside the wedge pattern on the daily chart. The upper trendline acts as resistance, which the bulls are testing it. % 50 Fibonacci backs this level.

If the price breaks above the descending trendline and maintains momentum, we could see a retest of the immediate resistance at 157.0. A successful breakout above this level could target the next resistance at 158.4.
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Bearish Scenario​

If the price fails to break above the descending triangle and falls below the ascending trendline, we could see a decline toward the immediate support at 151.8.​

 

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EUR/USD Analysis​

Solid ECN—The EUR/USD 4-hour chart reveals a strong uptrend within a well-defined ascending channel. The price is currently trading near the upper boundary of this channel, suggesting that upward momentum is being maintained.
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Bullish Scenario:​

If the pair continues to respect the ascending channel and the bullish indicators hold, the next immediate target could be the recent high around 1.089. A breakout above this level could see the pair testing the psychological resistance at 1.0900 and potentially extending towards 1.0930.
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Bearish Scenario:​

Should the pair fail to maintain the current momentum and break below the lower boundary of the ascending channel, immediate support is expected around the 38.2% Fibonacci retracement level at 1.08. A further decline could be seen in the pair testing the 50% retracement level at approximately 1.07.​

 

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UK Labour Data Fuels Rate Cut Expectations​

Solid ECN – The British pound edged slightly lower to $1.25 as traders digested recent labor data and the monetary policy outlook. The UK’s unemployment rate rose for the third month, while wage growth remained steady at 6%. This data aligns with the Bank of England’s (BoE) forecast and suggests that a rate cut could be on the horizon.

The probability of a BoE rate cut by June has increased slightly to 50%. Traders are betting that the central bank will deliver two quarter-point cuts by the end of the year. During its May meeting, the BoE maintained interest rates, but two members advocated for a rate cut, indicating a possible shift towards lower borrowing costs.

Governor Andrew Bailey hinted at potential future rate cuts, suggesting a more accommodative monetary policy ahead. This aligns with market expectations and reinforces the view that the BoE might soon reduce interest rates to support the economy.​

 

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GBP/USD Bullish Momentum: Key Levels to Watch​

Solid ECN – The GBP/USD daily chart reveals a recent uptrend within a well-defined ascending channel, indicating bullish momentum. Currently, the price is testing a key resistance level (1.27), which will be critical in determining the next direction.
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RSI (14)​

The Relative Strength Index (RSI) is at 64.99, suggesting bullish momentum. Although it is approaching overbought territory, it still has room to rise before a potential reversal.
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Awesome Oscillator (AO):​

The Awesome Oscillator shows increasing green bars, indicating strengthening bullish momentum. This positive momentum supports the potential for further upward movement.
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Resistance Levels​

1.270: The immediate resistance level, which the price is currently testing.
1.280: Next significant resistance level.
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Support Levels​

1.264: Immediate support level within the ascending channel.
1.259: Lower boundary of the ascending channel and a previous support level.
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Bullish Scenario​

If the pair breaks above the immediate resistance at 1.270, the next target would be the resistance 1.280. Sustained bullish momentum could see the pair aiming for 1.28 and potentially higher levels towards 1.289. The ascending channel supports this outlook, indicating the trend may continue upward if the price remains within the channel.
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Bearish Scenario​

If the pair fails to break the resistance at 1.2708 and falls below the immediate support at 1.264, we could see a decline towards the lower boundary of the ascending channel at 1.259. A breakdown below this level could target further support of around 1.2400.​