2023 Market Forecast by SolidECN

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Swiss Franc Climbs Amid Dollar Weakness and Rate Cut Expectations

In November, the Swiss franc strengthened to 0.88 against the USD, its highest level in two-and-a-half months. This rise was primarily driven by the dollar's broad depreciation, following a series of weak economic data that fueled expectations of the Federal Reserve cutting interest rates by the second quarter of 2024. Meanwhile, Switzerland's own economic situation, characterized by moderate inflation and a slowing economy, offered limited support to the franc. Inflation consistently stayed below 2% for the fifth month in October, and recent data indicated a stagnation in GDP growth in the second quarter.

Furthermore, diminishing concerns over a major escalation in the Israel-Gaza conflict reduced the franc's appeal as a safe haven, leading to its decline to near four-month lows against the euro. Despite these factors, the franc is on track to end 2023 stronger against both the dollar and the euro, largely due to the Swiss National Bank's reduction in foreign currency reserves, which hit a nearly six-year low in October.​

 

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Loonie Hits One-Month High Amid Disinflation and Strong Spending

In late November, the Canadian dollar reached around 1.36 per USD, its highest point in over a month. This rise was influenced by signs of a possible dovish turn by the Federal Reserve, leading to a sell-off of the USD. Meanwhile, in Canada, decreasing inflation and robust consumer spending have spurred increased market confidence, benefiting the Canadian dollar.

In October, Canada's inflation rate dropped to 3.1%, lower than the Bank of Canada's mid-next-year prediction of around 3.5%. Additionally, retail sales in September saw a 0.6% increase, exceeding expectations.​

 

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The Oil Market's Recent Dip: OPEC+ Strategy and Economic Factors

On Tuesday, WTI crude futures saw a slight uptick, trading around $75 per barrel after experiencing losses in four straight sessions. This change comes amid worries about potential further delays in the upcoming OPEC+ meeting, which may result in continuing the existing oil production policy.

Saudi Arabia is advocating for a cut in production quotas to stabilize the market, yet no agreement has been reached so far. The meeting, initially scheduled for November 26, has been pushed to November 30 because of disagreements over output quotas, particularly involving Nigeria and Angola. Since September 27th, there has been a more than 15% decline in the oil market, attributed to abundant supplies and global economic uncertainties.​

 

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U.S. Natural Gas Futures Dip Amid High Storage and Production

U.S. natural gas futures are hovering around $2.9/MMBtu, a level close to their lowest in twelve weeks. This pricing trend is primarily due to high storage levels, unprecedented production rates, and a dip in demand. Recent data from the U.S. Energy Information Administration (EIA) revealed a modest withdrawal of 7 billion cubic feet from gas storage in the week ending November 17. This figure is notably smaller than the 60 billion cubic feet withdrawal during the same period last year and falls short of the five-year average decline of 53 billion cubic feet.

Currently, U.S. gas stockpiles stand about 7% above the usual levels for this time of year. The EIA points to robust natural gas production and milder winter temperatures as the key reasons for these ample inventories. The warmer weather has led to a reduced need for heating, with forecasts predicting a 4% decrease in heating degree days compared to the last decade's average. This is expected to result in a 2% reduction in space heating consumption, compared to the five-year average. Adding to the supply situation, November has seen an average gas output of 107.6 billion cubic feet per day, an increase from the previous record of 104.2 billion in October.​

 

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GBPUSD Sees Strong Uptrend, Caution Advised for Long Positions

The GBPUSD currency pair recently began a stronger upward movement, surpassing its previous bullish trend. As of now, it's trading near 1.2703, with the RSI indicator indicating an overbought condition for nearly a day. Our previous technical analysis of GBPUSD cautioned that the pair was overbought, advising against long positions for retail traders. This advice remains relevant and applicable.

For investors considering going long, the 1.260 level presents a good and fair entry point, should there be any price adjustments in the GBPUSD pair.​

 

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EURUSD: Testing the Waters at 1.096

In the EURUSD market, the bears are currently putting pressure on the 1.096 support level. At the same time, the RSI indicator has exited the overbought zone, yet there's a noticeable divergence present. If the EURUSD manages to stay above 1.0963, the market sentiment is likely to remain bullish.

However, if the price of EURUSD dips below 1.0963, this bullish trend may pause. In this case, the focus will shift to how the market responds to the pivot point, which is also backed by the lower boundary of the bearish channel.​

 

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USDCAD Eases Selling Pressure, Eyes 1.35 Level

Today, the USDCAD experienced a reduction in selling pressure, settling below the flag's median line. The pair is now finding its footing below the middle line, around the 64.8% Fibonacci level on the 4-hour chart. A bearish movement towards 1.35 is anticipated, matching the 78.6% Fibonacci level.

A closer look at the 4-hour USDCAD chart reveals a divergence in the Awesome Oscillator with its bars turning green, while the RSI indicator suggests the likelihood of a price correction. The pair is currently restrained by the 23.6% Fibonacci level, which is preventing it from recovering more of its recent losses.

As long as it stays below this level, the price is expected to fluctuate within the 1.35 to 1.36 range.

 

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EURUSD

The EURUSD currency pair's downtick slowed near the lower line of the bullish flag. This pivotal mark is additionally supported by the Ichimoku cloud. For the bullish trend to maintain, the price should hold above the cloud and/or the 23.6% Fibonacci level. In this case, we can expect the EURUSD to continue its upward trend inside the flag.

To trigger a long trade on the pair, it is recommended to patiently wait for the technical indicators to support the bullish scenario. The Stochastic oscillator hovers in the oversold zone, while the ADX indicator is about to cross above the 20 level. While the ADX indicator demonstrates that the trend is lacking momentum, the stochastic oscillator or RSI should cross above the signal lines.

Conversely, the bullish flag will be invalid if the bears close and stabilize the price below the 23.6% Fibonacci level. Please note, this event won't invalidate the bullish trend as long as the EURUSD hovers above the Ichimoku cloud.​

 

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USDCAD Downtrend Continues, Fibonacci Levels in Focus

The downward trend of USDCAD has reached 1.352, which pushed the Stochastic oscillator into the oversold zone. At the same time, the RSI indicator is also approaching the oversold level, which suggests that the pair may enter a consolidation phase in the next week.

In this case, the pair may face the %38.2 level of the Fibonacci as a resistance. This level could attract more sellers to put more pressure on the pair and extend the downtrend to the %50 level Fibo and then the %61.8 level.​

 

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EURUSD at a Crossroads: Resistance Clash and Trend Predictions

The EURUSD pair is approaching a critical point, the 23.6% resistance level, which interestingly aligns with the Ichimoku cloud. Currently, the technical indicators are hinting at a potential sell-off. If the price manages to remain under the cloud, there's a strong chance we'll see a further downward trend, potentially reaching the 38.2% level, and maybe even the 50% mark.

However, there's another side to consider. Should the EURUSD pair successfully break through the 23.6% resistance and maintain its position above this level, it would suggest a shift in momentum. In such a scenario, the current bearish outlook would no longer be valid, indicating a possible change in trend.​

 

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Latest on GBPUSD: Bullish Flag & Ichimoku Insights

The GBPUSD currency pair is trading inside the bullish flag and above the Ichimoku cloud, indicating a bullish trend. However, the ADX indicator is approaching the 20 level, which suggests that the trend is weakening, and the pair is losing momentum. We expect the value of GBPUSD to rise again and target the upper band of the bullish flag, which is a continuation pattern of the previous uptrend.

On the other hand, the bullish scenario would be invalidated if the GBPUSD price falls below the cloud, which would signal a bearish reversal.​

 

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EURJPY Dips Below Key Level: A Closer Look

We've noticed a significant drop. Recently, it slipped under the important support mark of 159.37.

Looking at the Relative Strength Index (RSI), it's clear that there's a downward trend in momentum. This hints that we might see this decline continue. We're expecting the pair to keep dropping, possibly reaching the next support point at 158.32. Interestingly, this level is right where the lower edge of the bearish flag pattern lies. This pattern often signals that the current downward trend could keep going.​

 

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USDJPY's Bullish Stance Meets Resistance

Currently, the USDJPY pair is positioned within a bullish flag formation. Yet, there's been a notable change - the price has fallen below the Ichimoku cloud, hinting at a potential shift in the market's direction. As of now, the pair is undergoing a test at the lower boundary of this flag, and the ADX indicator is suggesting that we may see significant fluctuations ahead.

If the price drops past this crucial point, it's likely we'll see a further slide down to the 144.5 support level. This would be a key movement to watch for.

On the other hand, if the bulls succeed in keeping the price stable above 146.2, it could signal a continuation of the upward trend. In such a scenario, the pair might target the 23.6% mark on the Fibonacci retracement scale, possibly even stretching to the 38.2% level.​

 

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AUDUSD Pair in a Downward Trend: What are the Key Levels to Watch?

At the moment, the AUDUSD pair is facing a significant drop of almost 0.63% on a daily basis and is approaching the support levels that are determined by the lowest points of the last day of November.

If the pair breaks below this structure, it may encounter the next support level at the 200-day exponential moving average (golden curve), which also coincides with the 61.8% Fibo retracement of the upward movement that started in October 2023. On the other hand, the main resistance level could be the local highs near the 50% Fibo retracement.​

 

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EURUSD Continues Downtrend After Consolidation

Solid ECN – The EURUSD pair keeps falling in today's market after a brief pause near the 38.2% mark of the Fibonacci retracement. The ADX indicator shows that the market is in a strong trend, as it stays above the 40 line. Therefore, we expect the EURUSD value to face more downward pressure and reach the next support at the 50% Fibo level.

 

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Bearish Bets on EUR/NZD: The 1.7487 Support in Focus

The EUR/NZD currency pair experienced a rebound from the 1.7487 support level. This upward momentum was anticipated by the stochastic oscillator, which indicated an oversold condition as the pair dipped. The support area at 1.7487 has been a significant obstacle for bearish trends since May 2023.

However, today the pair struggled to break above the 23.6% Fibonacci retracement level. Should the bulls fail to maintain the price above this crucial mark, the resilience of the 1.7487 support level may be tested.

The current market forecast remains bearish, with the potential for a breach of the 1.7487 support if the price continues to linger below the 23.6% Fibonacci retracement level.

Conversely, if the EUR/NZD manages to surpass the 23.6% level, it could signify a temporary pause in the downtrend. In such a scenario, the price might aim for the 50% Fibonacci retracement level, indicating a possible shift in market dynamics.​

 

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GBPUSD in the Ichimoku Cloud

The GBPUSD pair is currently ranging within the Ichimoku cloud, which has stabilized the price above the 23.6% Fibonacci level. For the bullish trend to continue, the pair must cross above the bearish flag.

Failure to do so could lead to a decline towards the 38.2% Fibonacci level, which is a significant event to watch out for.

 

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NZ Dollar Bounces Back: A Look at the Interest Rate Landscape

The New Zealand dollar has seen a slight uptick, reaching approximately $0.615. This recovery comes as a result of an improvement in risk sentiment, coupled with ongoing global evaluations of interest rate prospects. On the home front, the Reserve Bank of New Zealand (RBNZ) has maintained a steady interest rate for the fourth consecutive meeting in November, although it hasn’t ruled out the possibility of further tightening measures.

Despite mounting pressure for a rate cut due to slowing inflation and lackluster economic data, the RBNZ has kept the cash rate at 5.5%, a peak not seen since December 2008. The central bank has also hinted at the potential need for another rate hike if inflation remains unyielding. This is largely due to concerns about sustained excess demand and continuous inflationary pressures, driven by high core inflation.​

 

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Japanese Yen Climbs as US Fed Rate Cuts Anticipated​

The Japanese yen has strengthened to about 147 per dollar, reaching its highest point in 12 weeks. This rise comes amid increasing expectations that the US Federal Reserve may end its current phase of monetary tightening and possibly start reducing interest rates next year. Concurrently, Bank of Japan (BOJ) board member Asahi Noguchi expressed over the weekend that Japan has not yet achieved inflation driven by wage increases. Instead, recent inflation rises have been cost-push driven. Noguchi believes it's too early to move away from the BOJ's highly accommodative monetary policy, echoing sentiments from other BOJ officials.

In economic news, recent data indicated that Tokyo’s core inflation rate in November rose less than anticipated. However, it exceeded the BOJ’s 2% target for the 18th month in a row, signaling sustained inflationary pressure. Additionally, there's positive news from the manufacturing sector, where sentiment has improved significantly in December, especially in the auto industry, suggesting a robust recovery.​

 

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Swiss Franc Strengthens as SNB Adjusts Forex Reserves​

The Swiss franc has been on a strong upward trajectory, surpassing 0.875 against the USD in November, marking its highest point since early August. This increase is largely fueled by expectations that the US Federal Reserve might cut rates by the second quarter of 2024, which has put pressure on the US dollar. Meanwhile, in Switzerland, moderate inflation and a slowing economy have contributed to limited monetary policy support for the franc. Inflation has remained under the 2% mark for the fifth month in a row as of October, and the latest data indicates that the country's GDP growth stalled in the second quarter.

Moreover, diminishing concerns over a major escalation in the Israel-Gaza conflict have reduced the demand for the franc as a safe haven, leading it to approach four-month lows against the euro. Despite these factors, the franc is still on track to end 2023 stronger against both the dollar and the euro. This strength is partly attributed to the Swiss National Bank’s (SNB) reduction in foreign currency reserves, which dropped to a nearly six-year low in October.​