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Former BOJ official says Bank expected to end its negative interest rate policy in AprilFormer BOJ official says Bank expected to end its negative interest rate policy in April
Key Insights
  • Asian markets edge up, U.S. CPI report in focus.
  • Yen’s weakness signals possible intervention.
  • U.S. inflation expected to slow slightly.
  • Hang Seng Index dips below 50 EMA.
  • ASX 200 shows cautious optimism.

Quick Fundamental Outlook

Asian stock markets saw a marginal rise as traders exercised caution ahead of a pivotal U.S. inflation report, which is expected to inform the Federal Reserve’s stance on interest rates.

There is particular scrutiny over the yen’s weakness, with its approach to annual lows sparking speculation about potential interventions. The impending U.S. inflation data, projected by economists to show a slight deceleration in October, is seen as a critical determinant for future rate decisions.

This data is key for indices like Hang Seng, ASX 200, and Nikkei 225, as a higher-than-expected inflation rate could lead to a more aggressive rate hike stance, potentially dampening investor sentiment and market performance across these regions.

Conversely, a cooling inflation might provide some relief to these markets, encouraging risk-on behavior among investors.

Hang Seng Index Prices Forecast

Hang Seng Index chart
In the latest trading sessions, the Hang Seng Index futures have depicted a retreat from their recent highs, landing at a level of 17,400, a decline of 1.04%. This pullback mirrors a cautious sentiment among investors as they navigate through a multitude of economic factors.

Notably, the index is currently positioned below the 50-period Exponential Moving Average (EMA) at 17,487, which is traditionally considered a bearish signal by market technicians.

The Relative Strength Index (RSI) is currently at 41.50, which suggests that the index is neither oversold nor overbought, leaving room for potential directional shifts based on upcoming market catalysts.

Immediate support for the index is identified at the 17,135 level, and if breached, could signal a deeper correction towards 16,975. On the upside, resistance lies near the 17,585 mark, with a break above potentially opening the path to $17,800.

Investors will closely monitor these levels for indications of the index’s short-term trajectory.

ASX 200 Chart
The ASX 200 index currently exhibits a mild upward trajectory, finding itself hovering around the 7005.11 mark, a modest rise that suggests a cautious optimism among traders. The index’s dance around the 50 EMA of 6970 signals a market in search of direction, with the EMA serving as a potential pivot point for future movements.

The Relative Strength Index (RSI), positioned at 42.59, sits in neutral territory, neither overextended in the bullish nor bearish realms, suggesting that there’s room for movement in either direction without immediate risk of overbuying or overselling.

Chart patterns indicate a consolidation phase within a broadening formation, hinting that the ASX 200 is at a crossroads, with the potential to break out from this period of indecision.

The market’s next move will be closely watched, as it will indicate whether recent gains are the beginning of a more sustained uptrend or merely a pause before a correction.

Nikkei 225 Prices Forecast

NKY Chart
The Nikkei 225 Index exhibits modest gains in its recent performance, demonstrating a slight increase to 32585.11, closely hugging the 50-day EMA at 31945.86. This adherence to the EMA suggests a fragile balance between bullish and bearish forces within the market.

A nuanced examination reveals the RSI at a neutral 49.68, signaling a market that is neither overbought nor oversold. This leaves ample room for the index to pivot in response to fresh market stimuli. As it straddles the line of equilibrium, the Nikkei 225 currently faces immediate resistance at 32729.76, a breach of which could pave the way towards the psychological landmark of 34681.95.

Conversely, the support level lies at 31328.07, guarding the index against a potential decline. Should this level succumb to selling pressures, it could signal a deeper retracement towards more robust historical support at 30483.20 and even 29305.50. Investors and analysts alike are watching these technical thresholds closely, as they could dictate the index’s short-term directional bias.

For a look at all of today’s economic events, check out our economic calendar.

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