MARKET UPDATE:
As investors ignored worries about the increase in COVID-19 cases and tighter lockdowns in some nations and concentrated on the prospects of a global economic recovery, Asian markets concluded the first quarter on a positive note. Sentiment was also boosted by the Federal Reserve’s dovish stance following its most recent rate increase, which suggested a more cautious and gradual strategy to normalising monetary policy. Later in the day, the Bank of England is anticipated to restrict policy even more.
Following this month’s turmoil, bank equities are once again in free fall. To win back investors, they must travel a long path.
U.S. equities were higher at the close on Wednesday, as gains in the Technology, Financials and Consumer Services sectors propelled shares higher.
March Swoon Is Nothing New for Bank Investors
Contagion fears in the industry were triggered by the sudden failures of Silicon Valley Bank and Signature Bank, which contributed to the 25% decline in the KBW Nasdaq Bank Index from March 1 through Wednesday. According to Dow Jones Market Data, that is on pace to become the fourth-worst month on record going back to 1992.
Meanwhile, the struggling rival Credit Suisse Group AG was hastily purchased by UBS Group AG for more than $3 billion, and midsize lender First Republic Bank received a $30 billion emergency reserve infusion from its competitors.
Due to the financial crisis, bank equities are once again underperforming the market. Despite the banking crisis, the S&P 500 has remained reasonably resilient, rising 1.5% in March to increase its gain for the year to 4.9%. Twenty-four big and midsize banks make up the banking index, which is down 18% in 2023.
In terms of commodities, gold rose above $1,970 per ounce as demand for it as a hedge against inflation and currency weakening increased in response to the Fed’s dovish tone. As OPEC+ supply and increasing US inventories put pressure on the market, crude oil fell below $70 per barrel. Investors reduced their expectations for additional rate increases this year, which resulted in a decline in the US dollar index, which compares the dollar to a basket of six main currencies, to 91.8.
What happened in Asian session?
The ANZ Business Confidence data for New Zealand shows a decrease in business confidence over the indicated time, from a previous value of -43.3 to -43.4.
What does it mean for Europe & US Session?
The EUR/USD could break out of stability and move towards the recent highs of around 1.0930 if the German Prelim CPI m/m was higher than forecast. The pair may move towards 1.0750 if US Final GDP Q/Q Unemployment Claims data come in better than anticipated.
The Dollar Index (DXY)
Key news events today
Final GDP q/q
Unemployment Claims
What can we expect from DXY today?
The final US GDP q/q at 2.7% is unchanged from the forecast and prior figures. But it’s anticipated that the number of unemployment claims will rise from 191K to 196K. This could be a sign of weakness in the job market and the economy at large, which would hurt 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 per cent, committed to returning inflation to its 2 per cent 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
Oil
Key news events today
No major news events.
What can we expect from Oil today?
Crude oil inventories fell by 7.5 million barrels, exceeding expectations of 1.8 million and 1.1 million barrels, respectively. This suggests a decrease in supply and may raise oil costs.
Next 24 Hours Bias
Bullish
The Euro (EUR)
Key news events today
German Prelim CPI m/m
What can we expect from EUR today?
The anticipated data is 0.6%, which is slightly less than the 0.8% recorded the month before. Since the ECB expressed hawkishness despite the banking crisis, if the actual number comes in below the forecast, it may signal lower inflationary pressures but could only result in a slight decline in the value of the EUR.
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 Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
When confronted with severe dysfunction, Governor Council Member Gravelle recommends making significant GOC bond purchases while Canada’s well-regulated financial system may still be impacted by international events. In moments of general stress, the system would receive support.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 12 April 2023
Next 24 Hours Bias
Mixed
Global Markets:
Asian Stock Markets: Nikkei down 0.36%, Shanghai Composite up 0.65%, Hang Seng up 0.56%, ASX up 1.02%
European equities, the DAX futures up 0.98%, CAC 40 up 1.07%, FTSE up 0.69%.
US Stock Market: Dow jones down 1.00%, S&P 500 up at 1.42%, Nasdaq 100 up at 1.79%.
Commodities: Gold at $1985.65 (+0.06%), Silver at $23.78 (+1.35%), Brent Oil at $77.76 (+0.22%), WTI Oil at $73.19 (+0.30%)
News & Data
- 12:30 PM GMT – (USD) Final GDP q/q
- 12:30 PM GMT – (USD) Unemployment Claims
- 12:30 PM GMT – (USD) Final GDP Price Index q/q
- 04:00 PM GMT – (CHF) Gov Board Member Mechler Speaks
- 07:45 PM GMT – (USD) Treasury Sec Yellen Speaks
- 11:30 PM GMT – (JPY) Tokyo Core CPI y/y
Technical Outlook
GBPUSD
At 1.2343, a multi-swing high resistance level, price is presently testing the first resistance. Price could move downward towards the first support at 1.2185 if it were to fail to overcome this barrier. This level is a solid overlap support and lines up with a 38.20% Fibonacci reversal. Price could move towards the second support at 1.2127, which is also an overlap support and lines up with a 38.20% Fibonacci retracement, if it were to break the first support if price were to move in that direction.
The price may run into two significant barrier levels as it rises. The first, which has already been noted, is at 1.2343. The second resistance is at 1.2445, which is a strong resistance level with multiple swings. Price could change the trend to a bullish one if it were to pass through these two resistance levels.
EURUSD
There is presently bearish momentum on the EUR/USD chart, and it may continue in that direction towards the first support level.
The first support level, which is an overlap support and might serve as a stopgap against further price drops, is situated at 1.0740. This support level also coincides with a 61.80% Fibonacci retracement, which strengthens the importance of its position. The next support level, a multi-swing low support, is found at the same 1.0689 level should the price breach this level.
The first resistance level, which is a swing high resistance, is located at 1.1008 on the resistance side. This price point might serve as a floor against further price increases. There is an additional middle resistance level at 1.0847 in addition to the first resistance level. This level is a strong resistance multi-swing level that corresponds to a 61.80% Fibonacci retracement. A bullish acceleration towards the first resistance level could be brought about by a breach above this level.
AUDUSD
AUD/USD’s overall momentum is presently bearish. The first support, which is an overlap support at 0.6643, could serve as the price’s next target as it moves lower in a negative trend. If the price were to keep falling, the second support at 0.6549, which is a swing low support, could act as a strong mark.
The first opposition, however, is an overlap resistance at 0.6771 and corresponds to a 38.20% Fibonacci retracement. The present bearish momentum may be reversed if this resistance level is broken. The price may find it difficult to overcome the overlap resistance at the second resistance level of 0.6872.
The first support and the current price are separated by an intermediate resistance at 0.6712 in the chart. This is a strong resistance level with multiple swings that lines up with a 61.80% Fibonacci retracement. A significant bullish move towards the first resistance could start if the price breaks through this intermediate resistance line.
USDJPY
The USD/JPY chart’s overall momentum is still bearish, and the price may respond negatively by falling from the first resistance and towards the first support. A strong mark, the first support at 131.58, is formed by an overlap support and a 38.20% Fibonacci retracement. The second support at 129.63, which is a multi-swing low support and a 78.60% Fibonacci retracement, is the next support level the market could fall to if it were to breach this support.
On the other hand, the first resistance at 132.84, which coincides with an overlap resistance and a 38.20% Fibonacci retracement, is also an important mark. Price may move upward towards the second resistance at 134.50, which is an overlap barrier and a 61.80% Fibonacci retracement, if it were to surpass this resistance.
S&P 500
Given that the price is above a significant ascending trend line, the US500 chart is presently displaying bullish momentum. There are two possible support levels from which the price might retrace and resume its upward trajectory. 3902.45 is the first support level, which is a multi-swing low support level. The second support, which is also a multi-swing low support level, is situated at 3844.08.
On the other side, the price could also encounter two possible resistance levels. The first resistance level, which has a 78.60% Fibonacci reversal, is located at 4038.62 and is an overlap resistance level. At 4077.53, there is a second barrier level that overlaps the first one.
WTI CRUDE OIL
WTI continues to be in a bearish momentum as the market might make a bearish move back towards its initial support. At 71.41, which is both an overlap support and a 38.20% Fibonacci retracement line, the first support can be found. Price declines towards the second support, which is an overlap support at 66.89, are possible if this level is broken.
On the upside, the overlap resistance and 61.80% Fibonacci retracement line at 74.07 marks the first resistance. Price could move towards the second resistance at 77.30, which is a multi-swing high barrier and a 78.60% Fibonacci retracement level, if it manages to break above this level.
SILVER
The first level of support is at 23.21, which is also a 38.20% Fibonacci retracement level and an overlap support. The second support level at 22.71, which is also an overlap support and a 50% Fibonacci retracement level, could become breached if this level is broken.
On the upside, an overlap resistance level at 23.76 serves as the first opposition level. The second resistance level at 24.31, which is also an overlap resistance, could be reached if this level is broken.
To spot potential trading opportunities, traders should keep a watch on price changes close to these important levels.
ETHEREUM
The ETH/USD chart’s overall momentum is bullish, suggesting that there may be more upside potential in the immediate future.
Looking at the possible market action, a bullish continuation towards the first resistance level at 1850.89 is conceivable. Prior to that, there is a chance that the price will revert to the first support level at 1667.31, which is a strong level of support and corresponds with the 38.20% Fibonacci level. If the price continues to decline, the second level at 1558.39 may provide support.
The first level at 1850.89 is a reasonable level of overlap resistance in terms of resistance. Price could move towards the next resistance level at an overlap resistance of 1972.94 if it is able to break through this level.
