MARKET UPDATE:

Trading in Risk as Bank Fears Drop 

Risk trades benefited overnight on news that First Citizen Bank had acquired Silicon Valley Bank’s assets and that the Fed was dedicated to preserving the safety of all bank deposits, which allayed concerns about systemic problems in the banking system. Bank shares rallied nicely, however, the major US indices had unexceptional days, with the Dow closing 0.6%, the S&P up 0.16%, and the Nasdaq finishing down 0.47%. Despite drifting away from the major currencies, the dollar traded within well-known ranges, and Treasury rates once more increased.

Gold Focusing 

Over the past several weeks, there has been a great deal of volatility on the world’s financial markets. Gold experienced a surge in price as investors’ concerns about bank contagion caused it to rise from $1,800 per ounce to over $2,000 per ounce. However, in recent weeks, gold’s long-standing reputation as a safe-haven asset came to light, and traders are now prepared for the next move after it topped out three times around the $2,000 mark. others anticipating additional market stress and turbulence will search for levels to buy, while others who believe the worst of the problems have passed will search for levels to sell or go short. Initial support is currently at or near recent lows of $1,934, longer-term support is at or near $1,850, and strong resistance is located close to the yearly high just below the $2,010 mark.

Talk about central banks will govern today 

Following the rate hikes last week, there has been a decent bit of central bank talk in the last few days, and there will likely be more in the sessions to come. In the upcoming trading session, representatives of the Bank of Japan, the Bank of England, the ECB, the German Buba, and the Fed are expected to speak. After the uncertainty and volatility of the last several weeks, anticipate the general message to be one of reassurance for the markets. It’s another quiet day for economic data, but we do have the CB Consumer Confidence release, which is expected to come in at 101.0, which is the first tier-one figure to come out of the US this week.

What happened in the Asian session?

BoJ Core CPI y/y was 2.7% as opposed to the expected value of 3.0% and the prior reading of 3.1%. The lower CPI reading suggests deflationary forces, which would encourage the central bank to continue its current accommodative monetary policy. While Governor Kuroda was speaking, the JPY stayed quiet.

What does it mean for Europe & US Sessions?

The first shock to Cable will come from Governor Bailey of the BoE as he delivers a speech in London before testifying before the Treasury Select Committee about the failure of Silicon Valley Bank. The release of the US CB Consumer Confidence Index will inject additional volatility into the GBP/USD pair later in the session. In case conditions are favorable, the pair may go for the recent highs near 1.2450.

The Dollar Index (DXY)

Key news events today

CB Consumer Confidence

What can we expect from DXY today?

The Conference Board’s Consumer Confidence Index has been on the slide since November 2022, falling from 111.3 to 102.9 by February 2023, a decrease of 8.4%. The anticipated release number is 101.0. If the actual release exceeds the forecast, it suggests that consumer confidence has grown, which might increase investor optimism and benefit the USD.

Central Bank Notes:

• The US banking system is sound and resilient, but recent developments may result in tighter credit conditions for households and businesses.
• The Federal Reserve has raised the target range for the federal funds rate to 4-3/4 to 5 percent, committed to returning inflation to its 2 percent objective.
• In determining the extent of future increases in the target range, the Committee will consider various factors, including the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and economic and financial developments.
• Next meeting is on 3 May 2023

Next 24 Hours Bias

Weak Bearish

The Japanese Yen (JPY)

Key news events today

BOJ Gov Kuroda Speaks

What can we expect from JPY today?

The JPY value may be impacted by BOJ Governor Kuroda’s speech at FIN/SUM 2023 in Tokyo if he makes any allusions to monetary policy adjustments or addresses issues with the Japanese economy. On the data front, it is anticipated that BOJ Core CPI y/y will drop from 3.1% to 3.0%. JPY may decrease if the prediction comes true and climb if an unexpected spike happens.

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
• The next meeting is on 27 April 2023 

Next 24 Hours Bias

Weak Bullish

The Euro (EUR)

Key news events today

ECB President Lagarde Speaks

What can we expect from EUR today?

The ECB President’s impending speech at the Bank of International Settlements Innovation Hub Euro system Center’s inaugural ceremony in Frankfurt could have a big effect on the EUR. A rise in the EUR can be anticipated if Lagarde reiterates the central bank’s aggressive position on the battle against persistent inflation.

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

The Pound (GBP)

Key news events today

BOE Gov Bailey Speaks

What can we expect from GBP today?

To testify about Silicon Valley Bank’s demise, BoE Governor Bailey and Deputy Governor David Ramsden will attend before the Treasury Select Committee in London.

Central Bank Notes:

• The BoE’s MPC increased the Bank Rate by 25bps to 4.25%, with a majority of 7-2 in favour of the hike
• The UK banking system is judged to be robust and resilient.
• CPI inflation increased unexpectedly but is expected to fall sharply over the rest of the year due to lower energy prices.
• The MPC will continue to monitor inflationary pressures and adjust Bank Rate as necessary.
• Next meeting on 11 May 2023 

Next 24 Hours Bias

Mixed

Global Markets:

Asian Stock Markets: Nikkei up 0.15%, Shanghai Composite is down 0.19%, Hang Seng up 1.11%, ASX up 1.04%

European equities, the DAX futures up 0.47%, CAC 40 up 0.52%, FTSE up 0.40%.

US Stock Market: Dow jones up 0.60%, S&P 500 up at 0.16%, and Nasdaq 100 is down at 0.47%.                    

Commodities: Gold at $1952.54 (-1.19%), Silver at $22.91 (-0.59%), Brent Oil at $77.97 (0.27%), WTI Oil at $73.22 (0.54%)

News & Data:

• (USD) CB Consumer Confidence (Mar) Forecast 101.0, Previous 102.9 at 19:30
• (AUD) Retail Sales (MoM) (Feb) Actual 0.2%, Previous 0.1%, Previous 1.9% at 06:00
• (GBP) BoE Gov Bailey Speaks at 14:15
• (JPY) BoJ Governor Kuroda Speaks at 09:30 
• (EUR) ECB President Lagarde Speaks at 18:45

Technical Outlook

GBPUSD

The first support level, which is an overlap support level at 1.2185, is currently showing potential for a continuation on the GBP/USD chart as a bearish momentum. If the price were to decline further, it might reach the second support level at 1.2127, which is also an overlap support level and coincides with the 38.20% Fibonacci retracement level.

On the other hand, the first resistance level is at 1.2343, which is a multi-swing high resistance level. If the price were to bounce from this level, it could potentially drop towards the first support level. However, if the price were to break through the first resistance level, it may rise towards the second resistance level at 1.2445, which is a swing high resistance level.

EURUSD

With potential for a bearish reaction off the first resistance level at 1.0822 and a subsequent drop to the first support level at 1.0741, the EUR/USD chart is currently showing bearish momentum. The first support level is an overlap support level, and the second support level, which is located at 1.0689 and corresponds with the 61.80% Fibonacci retracement level, is also an overlap support level.

On the other hand, the first resistance level is a swing high resistance at 1.0822, which also coincides with the 50% Fibonacci retracement level. Breaking through this resistance could lead to a rise towards the second resistance level at 1.0927, which is another swing-high resistance level.

AUDUSD

The AUD/USD chart is currently showing a bullish momentum, with price above the Ichi Moku cloud. This suggests that the uptrend may continue.

Price has the potential to rise to our first resistance level at 0.6774, which is a strong overlap resistance level and falls within a 38.20% Fibonacci retracement if it does so.

The first support level to watch for in the case of a price decline is at 0.6640, which is a strong overlap support level. If price were to break this support level, it may potentially drop to the 2nd support at 0.6549, which is also a swing low support.

A significant overlap resistance level and second resistance level are present at 0.6876, which also marks a 50% Fibonacci retracement. If price were to break this resistance level, it could potentially rise even further.

In general, the AUD/USD chart’s bullish momentum indicates that price may continue to rise towards the first resistance level at 0.6774. However, it’s important to monitor the support levels at 0.6640 and 0.6549 in case of a price drop.

USDJPY

The USD/JPY chart currently shows bearish momentum, indicating that prices could potentially continue to move downwards. The first support level is at 129.61, which is a swing low support and coincides with the 78.60% Fibonacci retracement level. The second support level is at 128.03, which is also a swing low support. The overlap resistance level at 132.81 on the resistance side corresponds to the 38.20% Fibonacci retracement level. The 61.80% Fibonacci retracement level and the second resistance level, which is also an overlap resistance, are both located at 134.55. If prices break through the first support, they could possibly fall to the second support. However, if prices break through the first resistance, they could potentially move towards the second resistance.

S&P 500

If prices break through the first support, they could possibly fall to the second support. However, if prices break through the first resistance, they could possibly move toward the second resistance.

In terms of potential price movement, the US500 could see a bearish continuation towards its 1st support at 3903.25, which is a multi-swing low support level. If this level were to break, the next support is at 3843.60, another multi-swing low support.

On the other hand, if bullish momentum continues, price could rise towards the 1st resistance level of 4002.68, which is a multi-swing high resistance level. The 2nd resistance level is at 4068.96, an overlap resistance level.

WTI CRUDE OIL

The overall momentum of the WTI chart is currently bearish, with price potentially making a bearish reaction off 1st resistance and dropping to 1st support.

66.42 is the first support level to keep an eye on. This level has historically served as support and is overlap support. If price were to break below this level, it could drop towards the 2nd support at 65.04, which is multi-swing low support.

On the other hand, 72.63 marks the first resistance level to keep an eye on. This level has historically served as a price floor and is an overlap resistance. It also falls within the 127.20% Fibonacci retracement, giving the level even more significance.

Price reacting off the first barrier and falling towards the first support would reinforce the chart’s overall negative momentum. However, if the price were to surpass the first resistance level, it might ascend to higher levels of resistance.

SILVER

The initial support level at 22.66, which is an overlap support level, is currently displaying possibility for a continuation on the silver chart, which currently displays positive momentum. Prices might approach the second support level at 22.00, which is also an overlap support level and corresponds with the 61.80% Fibonacci retracement level,

On the other hand, the first resistance level, which has a 127.20% Fibonacci extension, is at 23.05, which is an overlap resistance level. A surge towards the second resistance level at 23.50, a swing high resistance level, could result from breaking past this barrier.

ETHEREUM

Bearish Momentum Continues in ETH/USD; Possible Drop to First Support

The ETH/USD chart’s overall momentum is currently bearish, and the price may continue to trend lower towards the first support level. This is shown by the price being below the bearish Ichi Moku cloud.

ETH/USD’s first support level is located at 1667.90. This level is a good support as it is an overlap support and has a 38.20% Fibonacci retracement lining up with it. Price may move towards the second support level at 1557.75, which is another overlap support, if it were to break below this level.

On the other hand, the 1st resistance level for ETH/USD is at 1851.48, which is a multi-swing high resistance. The price has struggled to break above this level in the past, indicating strong selling pressure from the bears.