MARKET UPDATE:
Markets Are Boosted by the Credit Suisse-UBS Merger
Due to the announcement that UBS has helped save Credit Suisse, Asian equities have started the week steadily. Due to Friday’s strong losses on European and US stock exchanges, traders were anticipating a challenging opening. The Nasdaq fell by 0.7%, the S&P by 1.1%, and the Dow by 1.2% in the US. The day started without a significant recovery bounce, and while most Asian indices are still down, the losses have not been as severe as had been anticipated. Investors must now decide whether the aggressive action taken to save the Swiss behemoth offsets the problems that led to this crisis.
Gold rises over 2% to year-high levels.
On Friday, gold broke through resistance points and previous yearly highs to trade very near the magical $2000 level. Investors flocked to the Safe Haven favourite due to concerns about more banking sector contagion, and it exploded after breaking past technical barrier levels. Despite a minor sell-off following news of the Credit Suisse deal over the weekend, the price is still above $1,970. The $2,000 barrier might be tested sooner rather than later if any new information alarmed an already nervous market.
The Week’s Attention Is on FOMC
Although being just a few days away, the most recent Fed meeting still seems far away to some traders as the market is continually bombarded with new information about the global banking system. Rate reductions are already fully priced in for later this year, but the market is still giving a Wednesday rate hike a 60% chance of happening. But, given how much the expectation for the conclusion of this specific meeting has fluctuated over the past few weeks, we anticipate that there will be additional turbulence surrounding the result, with the data continuing to strongly point in one direction and market upheaval suggesting in the opposite.
What happened in the US session?
Leading central banks joined forces to provide a “swap line” as a lifeline for commercial banks facing liquidity issues.
The initial UoM Consumer Sentiment Index for the US came in at 63.4. (Forecast 66.9, Previous 67.0). The lower-than-expected number reveals consumers’ negative attitudes of the nation’s present and foreseeable economic prospects.
What does it mean for the Asian Session?
The currencies are anticipated to remain unchanged for the remainder of the day because there is a lack of important news for the current trading session. Due to persistent worries about the banking crisis’s resolution, investors may continue to gravitate towards gold as a safe-haven asset.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The previously released Prelim UoM Consumer Sentiment report, which showed a lower number, may have provided price guidance for the DXY. Because of the weaker economic development and decreased consumer spending, the USD may fall as a result.
Central Bank Notes:
- The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
- The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
- A majority vote from the Committee supported the decision to raise the target range
- Next meeting is on 23 March 2023
Next 24 Hours Bias
Weak Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from gold today?
Gold is likely to reach its 2020–2022 highs of about $2,070 given the current uncertainties surrounding the central banks’ recent rescue packages for the banking sectors.
Next 24 Hours Bias
Bullish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The JPY may decline if the central bank indicates in the Summary of Views that it is worried about the state of the economy or that it would pursue a looser monetary policy.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Next 24 Hours Bias
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The impact of the next data releases for the EUR is anticipated to be minimal. The trade balance is anticipated to increase to -17.3B, while German PPI is predicted to decline by 1.3% (from -1.0% previously) (-18.1B previous). The market may not be considerably impacted by the German Buba Monthly Report.
Central Bank Notes:
- ECB raised interest rates by 50 basis points to ensure the 2% inflation target is met
- Inflation is projected to average 5.3% in 2023, with growth at 1%, and underlying price pressures remain strong
- The bank will continue to monitor market tensions closely and will be data-dependent in its policy rate decisions
- Next meeting on 4 May 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei down 1.42%, Shanghai Composite down 0.48%, Hang Seng up 2.65%, ASX down 1.46%
European equities, the DAX futures down 0.43%, CAC 40 down 0.34%, FTSE down 0.77%.
US Stock Market: Dow jones down 1.19%, S&P 500 down at 1.10%, Nasdaq 100 down at 0.74%.
Commodities: Gold at $1990.50 (0.09%), Silver at $22.56 (-0.08%), Brent Oil at $71.14 (-2.51%), WTI Oil at $65.16 (-2.53%)
News & Data:
- (USD) 6-Month Bill Auction Previous 4.700% at 21:00
- (JPY) PBoC Loan Prime Rate Actual 3.65%, Forecast 3.65%, Previous 3.65% at 06:45
- (EUR) German PPI (MoM) (Feb) Actual –0.3%, Forecast –0.5%, Previous –1.0% at 12:30
- (EUR) Trade Balance (Jan) Forecast –12.5B, Previous –8.8B at 15:30
- (EUR) ECB President Lagarde Speaks at 21:20
Technical Outlook
GBPUSD
GBP/USD Maintains a Bullish Trend with an Eye on the First Resistance
The GBP/USD chart’s general momentum is bullish, and there has been a significant upward advance. Around 1.1630, a solid level of support with a 38.20% Fibonacci retracement aligning up with it, the price is currently trying a pullback support. This can be a sign that the price will keep climbing towards the first resistance level.
If the price reverses from the first support, it can go up into the first resistance at 1.2440, a significant swing high resistance level that has historically kept the price down. At 1.2671, there is both an overlap resistance and an intermediate resistance. Price acceleration to the first resistance may be strengthened if it manages to break over this level.
EURUSD
The EUR/USD currency pair is currently showing signs of bullish momentum, and further gains towards the first barrier level are possible.
Meanwhile, a pullback support is holding the price steady at 1.0478, which also corresponds to the 38.20% Fibonacci retracement level. Price might move in the direction of the first resistance level of 1.1001, which is a big swing high resistance level, if it were to retrace from this support.
The intermediate resistance level at 1.0787, which also serves as an overlap resistance level, is present in addition to the first resistance level. A stronger positive momentum towards the first resistance level could start if the price manages to break past this intermediate barrier level.
The 50% Fibonacci retracement level and an intermediate support level on the downside are both located at 1.0345. Although there is still a positive overall inclination, a move towards this support level is less likely.
AUDUSD
Prices are breaking above a declining resistance line on the AUD/USD chart, which suggests the possibility of more bullish advances. Prices may move off the first support level and back up towards the first resistance because the general trend of the chart is bullish.
The first support level, which overlaps with the 38.20% Fibonacci retracement level, is located at 0.6693. Prices might move upward towards the first resistance level at 0.6886, which is also an overlap barrier and corresponds with the 50% Fibonacci retracement level, if they bounce off this support.
Prices might potentially reach the second resistance level at 0.7127, which is a swing high resistance, if they continue to advance above the first resistance level. The second support level, at 0.6554, which is an overlap support and corresponds with the 61.80% Fibonacci retracement level, might be reached if prices fall below the first support level.
USDJPY
Momentum in USD/JPY Weakens, Possibility for Bullish Reversal Off First Support
Now, the USD/JPY currency pair exhibits weak momentum and low confidence. However, there is a chance for a positive reversal off the first support level and a possible advance towards the first resistance level.
The first support level, which is at 131.219 and coincides with the 61.80% Fibonacci retracement, is a strong overlap support level. Price may move upward into the first resistance level at 139.450 if it were to bounce off this support level. The 50% Fibonacci retracement and this resistance level are overlap resistances.
The second resistance level at 145.169, which is also an overlap barrier, may be reached by the currency pair if it is able to overcome the first resistance level. The 137.885 level, an intermediate resistance level, should also be considered.
The second support level at 127.087 would be the level to which the currency pair would fall if the first support level were broken. This amount of support, which is a swing low support, has previously undergone several tests.
DOW JONES
Bearish momentum can be seen on the DJ30 chart, which suggests that the price may drop further in direction of the first support level.
A considerable overlap support level at 30434 serves as the first support level. A further overlap support level and intermediate support level are located around 3402 and the 50% Fibonacci retracement, respectively.
The overlap resistance level at 32428, which is the initial resistance level on the resistance side, coincides with the 38.20% Fibonacci retracement. Price might move upward towards this resistance level if it were to retrace its steps from the first support level.
The second support level at 31402 may be reached if the price were to break through the first support level.
WTI CRUDE OIL
WTI Oil price charts have recently been displaying neutral momentum, which means that prices may continue to move back and forth between support and resistance levels. The chart’s overall image does not clearly show the market’s direction.
The first support level, which is a swing low support level, is currently at 64.35. The second support level, which is a swing low support level, is located at 53.63. If the price falls to these support levels, there should be strong buying opportunities.
On the other side, the initial resistance level, an overlap level, is at 70.41. Given that it has historically served as a big resistance level, this level may prove to be a significant obstacle for buyers. The second resistance level, a pullback resistance level, is located at 82.14. This level could also serve as a sizable obstacle for consumers to overcome.
GOLD
Gold prices have been under bearish pressure for a while, and the XAU/USD chart’s general momentum is still bearish. The fact that a significant falling trend line is supporting the downtrend is one of several elements that contribute to this bearishness.
During this time, the price may change between the first support and first resistance level. A crucial multi-swing low support level at 1881 serves as the first support level. Price might continue its downward trend until the intermediate support at 1955, a pullback support level, if it were to break through this level.
Yet, the initial resistance level at 2000 is a significant swing high barrier level that may serve to restrain any bullish advances. Price might move towards the second resistance level at 2072, another important swing high resistance level, if it were to break through this one.
BITCOIN
Given that the price is currently below a significant descending trend line on the BTC/USD chart, further downside movement may be anticipated.
Currently, the price of BTC/USD has the potential to decline towards the first support level, which is a significant multi-swing low support level and is located at 25234.73. If the price falls below this level, the next downward target might be the second support at 23910.72, which is another overlap support level.
On the other hand, if the price can gather some bullish vigour, a positive advance in the direction of the first resistance level at 28359.40 is possible. This resistance level has additional significance because it is also a 38.20% Fibonacci retracement level. The second resistance level at 32842.55, which is also a significant overlap resistance level, may be the next objective if the price is able to break above this level.
