Currency Pairs Market Analysis

[Solid ECN]

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US100​

• Markets remained nervous on the final trading day of the week with major European and US indices pulling back​
• Top blue chips indices from Europe dropped over 1% lower while major Wall Street indices, like S&P 500 and Nasdaq, are trading around 1.0-1.5% lower on the day​
• Flight to safety can be spotted on the markets with money flowing to precious metals and bonds​
• Gold is trading over 3% higher on the day as short- and long-term US yields plunge with psychological $2,000 level being just 1% away​
• Markets are pricing around 60% chance of Fed hiking rates by 25 basis points next week and around 40% of keeping them unchanged​
• USD is one of the worst performing G10 currencies today​
• In spite of yesterday's liquidity boost from major central banks, share price of First Republic Bank saw only short-lived relief and is plunging 25% today​
• Credit Suisse remains in the center of attention in Europe with bank calling its CFO teams to work over the week and look for 'scenarios for the bank'​
• Also, media reports saying that major banks are limiting trading with Credit Suisse are mounting. Deutsche Bank and Societe Generale are said to be the latest to restrict trading with CS​
• Energy commodities are pulling back amid an overall increase in risk aversion. Brent and WTI are trading 2% lower and is heading for the biggest weekly drop since April 2022 while US natural gas prices plunge 7%​
• Downward pressure on US natural gas prices is further magnified by new weather forecast for the United States that hint at near- or above-average temperatures in key heating regions over the next 2 weeks​
• University of Michigan consumer sentiment for March missed expectations significantly, dropping from 67.0 to 63.4 (exp. 67.0). Both current situation and expectations subindices missed estimates significantly​
• In spite of risk-off moods seen across most financial markets, cryptocurrencies are having a great day. Bitcoin jumps 6% and trades in the $26,500 area​

Nasdaq-100 (US100) failed to sustain bullish momentum and break above the 12,750 pts resistance zone. The index is pulling back today as concerns over the condition of the US and European continue to linger over markets. However, Nasdaq-100 drops the least among major Wall Street indices due to an almost non-existent share of the banking sector in the index.​

 

[Solid ECN]

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EURUSD​

The EURUSD pair shows calm positive trades to gradually towards our waited target at 1.0745, getting good support by the EMA50, to keep the bullish trend suggested for the upcoming period.

It is important to monitor the price when reaching the targeted level, as breaching it will extend the bullish wave to reach 1.0920 areas as a next main station, while consolidating against the bullish wave will press on the price to rebound bearishly to test the minor support areas around 1.0635 initially. On the other hand, we should note that breaking 1.0635 will stop the expected rise for today and push the price to turn to decline to visit 1.0515 level as a first station.​

 

[Solid ECN]

GBPUSD ​

The GBPUSD pair provided new positive trades to test 1.2200 barrier, waiting to get positive motive that assists to push the price to continue the price and achieve our positive targets that start at 1.2260 and extend to 1.2440 after surpassing the previous level.

The EMA50 continues to support the expected bullish wave, which depends on the price stability above 1.2060, as breaking it will put the price under negative pressure that targets testing 1.1940 before any new attempt to rise.​

 

[Solid ECN]

EURUSD​

Euro continues to recover against the dollar at the beginning of this week, after a sharp crash in the last week - that was motivated by the worries around Credit Suisse that put the European banking sector under pressure and heavily penalized the euro.

Daily Time Frame EUR/USD​

• On the daily chart, we can see that the price is once again testing the upper limit of the range, close to 1.0695.​
• This will be a decisive zone for the price to understand the next momentum in the currency pair.​

Dollar Index Daily Time Frame

On the dollar index chart, we can see that the bullish movement slowed down after the price tested the 50 period exponential moving average (EMA).
As long as the price remains below this zone, we should expect the bearish movement to continue over the next few sessions.

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• USD index, Daily time frame chart. ​
• JPY leads the gains this trading session.​

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[Solid ECN]

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AUDUSD​

Yesterday's trading on Wall Street and in Europe ended higher, making up for losses from earlier in the day initiated by the uncertainty surrounding the takeover of Credit Suisse by UBS. Better sentiment fueled Asian markets today. Stock exchanges in Japan are closed due to a national holiday.​

• AUDUSD pair breaks back below the 0.6700 level. The case for a pause in the rate hike cycle by the RBA at its 4 April meeting has strengthened. According to the RBA minutes released today, the Board agreed to reconsider the case for pausing rate hikes and to closely examine incoming data from the economy.​
• The ECB's Holzmann is softening his previous calls for three consecutive 50 basis point rate hikes.​
• From the US, there was some news affecting the stock market. The US Treasury is looking at unlimited deposit guarantees (via the FDIC) if the banking crisis worsens.​
• On the political front, investors are looking at the Putin-Xi meeting in Moscow, which may bring new threads in the realm of the Ukraine conflict and other geopolitical-economic relations.​
• PIMCO lost $340 million on the redemption of Credit Suisse Bank's AT1 bond. Lawyers from Switzerland, the United States and the United Kingdom are talking to Credit Suisse's AT1 bondholders about possible legal action after up to $17 billion in losses related to the redemption.​
• Goldman Sachs commented on the current state of the equity market this way - "valuations don't look particularly attractive".​
• Bill Ackman, founder and hedge fund manager of Pershing Square Capital commented that the FOMC should consider holding off on rate hikes for tomorrow's Committee decision. Today marks the start of the Fed's two-day meeting in Washington. ​
• Citi predicts a 25bp rate hike on Wednesday, and notes that the tone of the press conference will now be particularly important.​
• Citadel and Trafigura traders believe that the turmoil in the banking market is temporary and unlikely to cause far-reaching perturbations in the global economy. Demand for oil should strengthen. ​

Quotations:​

Futures in Europe point to a bullish opening to the session on the Old Continent. US contracts are also gaining, however the scale of the increases is minimal. On the FX market, the USD is currently performing best. NZD and AUD are the worst performers. Energy commodities are down, extending the wave of uncertainty in the economy. Gold and silver are correcting recent gains and recording slight declines. Bitcoin is currently losing 0.4 per cent and slipping towards $27,800.

The AUDUSD pair is currently trading in a structure bounded by important support and resistance levels. The upcoming FOMC decision and ongoing banking uncertainty could create additional volatility on the pair.​

 

[Solid ECN]

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ZEW Sentiment Index Below Expectations​

• 10:00 am GMT - Germany, ZEW sentiment index for March. Actual: 13.0. Forecast: 15.0. Previously: 28,1​
• Current conditions: Actual: -46.5. Forecast: -44.3. Previously: -45.1​
• ZEW says the international financial markets are under strong pressure. Assessment of the earnings development of banks and insurance sector have deteriorated considerably.​

DE30 did not react to the below expectation reading of the ZEW index.​

 

[Solid ECN]

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USDCAD​

12:30 am GMT - Canada, CPI inflation report for February. ​

• Headline. Actual: 5.2% YoY. Forecast: 5.4% YoY. Previously: 5.9% YoY​
• MoM. Actual: 0.4%. Forecast: 0.6%. Previously: 0,5%​
• Core. Actual: 4.7% YoY. Forecast: 4.8% YoY. Previously: 5.0% YoY​
• Core MoM. Actual: 0,5%. Previously: 0,3%​

The USDCAD pair gained slightly shortly after Canada's CPI inflation reading.​

 

[Solid ECN]

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EURUSD​

US home sales data for February was released at 2:00 pm GMT today and it turned out to be a massive beat. Data came in at 4.58 million, up from 4.00 million in January and significantly above 4.20 million expected by the market. The release trigger an uptick on equity markets with S&P 500 (US500) reaching a fresh daily high near 4,030 pts. USD, on the other hand, was muted with EURUSD barely moving in the first minutes following the release.

US home sales data for February was released at 2:00 pm GMT today and it turned out to be a massive beat. Data came in at 4.58 million, up from 4.00 million in January and significantly above 4.20 million expected by the market. The release trigger an uptick on equity markets with S&P 500 (US500) reaching a fresh daily high near 4,030 pts. USD, on the other hand, was muted with EURUSD barely moving in the first minutes following the release.​

 

[Solid ECN]

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GBPUSD​

Inflation Rate in the United Kingdom increased to 10.40% YoYin February from 10.10% in January, above market estimates of 9.9% YoY.

The largest upward contributions came from restaurants and cafes, food, and clothing, partially offset by downward contributions from recreational and cultural goods and services (particularly recording media), and motor fuels. Core CPI rose 6.20% in February over the same month in the previous year, well above analysts' estimates of 5.7%. Fresh data may suggest that the BoE may not necessarily be approaching the end of the tightening cycle. Tomorrow a 25 bp rate hike is expected.

GBPUSD is trading higher today and fresh CPI data provided more fuel for bulls. The currency pair is moving further away from support zone in the 1.2215 area.​

 

[Solid ECN]

EURUSD​

• The Fed decision was as usual the most important macro event of the day. Federal Reserve decided to raise rates by 25 basis points as expected.​
• The Fed left the QT programme unchanged, but kept the forward rate forecast at 5.1% unchanged.​
• The Fed's change in communication is linked to problems in the banking sector. The Fed acknowledges that the tightening of credit conditions acts as a tightening of monetary conditions.​
• But reducing interest rates this year is not probable and more interest hikes from the Fed may be appropriate;​
• However, the Fed rules out interest rate cuts this year. The Fed believes that current policy is appropriate. This could mean a final hike in May;​
• In the Fed's view, current liquidity measures are sufficient. The banking system is resilient and there is no widespread problem in the system​
• In response, we saw a marked weakening of the US dollar. EURUSD rose to the 1.0900 level. In contrast, we saw strong gains on Wall Street. The US100 clearly broke through 13000 points and the US500 breached 4050 points​
• Crude oil stocks rose by 1.12 million brk on expectations of a decline of 1.4 million brk. Oil gained more than 2 per cent today, making up for recent losses in oil due to uncertainty. WTI returns above $70 per barrel​
• OPEC+ is not expected to consider major oil production cuts, despite recent strong price falls​
• UK inflation came in higher than expected at 10.4%, resulting in a marked strengthening of the pound since the start of today's session​
• A weaker dollar in the wake of the Fed's actions caused gold prices to rebound towards US$1,970 per ounce​
• The euro received support from rumours that the ECB is thought to believe that recent stability measures for the banking sector should provide a basis for further hikes. Lagarde, on the other hand, spoke of the ECB not being compelled to both hike and cut or keep rates unchanged.​

EURUSD tested the 1.0900 area against expectations of a near-term hike in the US. Source: xStation5​

 

[Solid ECN]

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EURUSD​

France, PMI indices for March.​

• Manufacturing. Actual: 47.7. Expected: 48; Previous: 47.4​
• Services. Actual: 55.5. Expected: 52.4 Previous: 53.1​

Germany, PMI indices for March.​

• Manufacturing. Actual: 44.4. Expected: 47 Previous: 46.3​
• Services. Actual: 53.9. Expected: 51.0 Previous: 50.9​

Although industrial data remain under pressure, the Composite index surprises the consensus on the upside. Let's remember that services are responsible for most of Europe's GDP.

The EURUSD pair extends declines after a reading of PMI data from major EU economies. The combined reading for the Eurozone will be known at 10:00 am GMT.​

 

[Solid ECN]

Breaking: EUR ticks higher after German IFO beat​

German Ifo Institutes released a new set of business climate indices for March today at 9:00 am BST. Data turned out to be much better than expected. Headline index climbed from 91.1 to 93.3, while a downtick to 91.0 was expected. This was driven by solid beats in both current conditions and expectations subindices. Ifo economists noted that recession in Germany became more unlikely and that proportion of business that want to raise prices has dropped. Around 41% of companies complained about supply bottlenecks in March.​

• German Ifo Business Climate for March: 93.3 vs 91.0 expected (91.1 previously)​
• Current Conditions: 95.4 vs 94.1 expected (93.9 previously)​
• Expectations: 91.2 vs 88.3 expected (88.5 previously)​

Market reaction to the upbeat Ifo data was fairly muted. DE30 barely saw any move while EURUSD moved around 0.1% higher.

EURUSD ticked higher following release of better-than-expected Ifo data. The main currency pair is testing short-term resistance zone marked with 38.2% retracement of a recent upward impulse.​

 

[Solid ECN]

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EURUSD​

EURUSD is struggling to find a direction at the beginning of a new week. The main currency pair is trading little changed on the day even in spite of a decent beat in German Ifo indices for March. Headline Ifo index jumped from 91.1 to 93.3 (exp. 91.0). This beat was driven mostly by a jump in expectations subindex from 88.5 to 91.2 (exp. 88.3). Nevertheless, EUR stayed fairly muted following the release. A number of ECB speakers scheduled for today may provide some volatility on EUR-related FX pairs later into the day. However, euro and other European assets are expected to get more volatile in the second half of the week as flash CPI data from the Old Continent will be released. German reading on Thursday, 1:00 pm BST and French reading on Friday, 7:45 am BST will be the most closely watched ones. Both are expected to show significant deceleration.

Taking a look at EURUSD chart at H4 interval, we can see that the pair halted the recent drop at the 50-period moving average (green line) near 38.2% retracement of the downward impulse launched at the beginning of February. However, subsequent rebound was halted today at the resistance zone marked with 50% retracement and the pair has struggled to determine direction for the next move since. A failure to break above could lead to a retest of the aforementioned 38.2% retracement in the 1.0710 area. On the other hand, a break above would pave the way for a test of swing levels marked with 61.8 and 78.6% retracements in 1.0830 and 1.0920 areas, respectively.​

 

[Solid ECN]

Gold​

The improvement of market sentiment puts pressure on safe haven assets

The beginning of the final week of March looks much compared to the end of the previous one, when the cost of insuring Deutsche Bank's debt against the risk of default surged to the highest on record on Friday. Today, however, the moods improved, mostly thanks to the final sale of Silicon Valley Bank, which may probably end the topic of instability of the banking sector. Additionally, the FDIC will continue to participate in the takeover of SVB by First Citizens.

In Europe, investors were worried that Deutsche Bank could be another bank which faces serious problems, but it is worth remembering that recent years have brought a significant improvement in the bank's situation. Firstly - Deutsche recorded 10 quarters of profitability, secondly, the CET1 index, which shows the bank's solvency, amounted to 13.4% (although it is still lower than the average for EU countries). On the other hand, the bank's coverage ratio was 142% at the end of 2022, and the net stable funding ratio reached 119%. These data do not suggest that the bank may collapse quickly.

Therefore, the moods are improving significantly - we are observing a solid rise of US yields, which puts pressure on gold. Price pulled back 1.5% below $1950 and approaches the local lows of March 21/22 and 38.2 Fibonacci retracement of the last upward wave.​

 

[Solid ECN]

Gold​

The improvement of market sentiment puts pressure on safe haven assets

The beginning of the final week of March looks much compared to the end of the previous one, when the cost of insuring Deutsche Bank's debt against the risk of default surged to the highest on record on Friday. Today, however, the moods improved, mostly thanks to the final sale of Silicon Valley Bank, which may probably end the topic of instability of the banking sector. Additionally, the FDIC will continue to participate in the takeover of SVB by First Citizens.

In Europe, investors were worried that Deutsche Bank could be another bank which faces serious problems, but it is worth remembering that recent years have brought a significant improvement in the bank's situation. Firstly - Deutsche recorded 10 quarters of profitability, secondly, the CET1 index, which shows the bank's solvency, amounted to 13.4% (although it is still lower than the average for EU countries). On the other hand, the bank's coverage ratio was 142% at the end of 2022, and the net stable funding ratio reached 119%. These data do not suggest that the bank may collapse quickly.

Therefore, the moods are improving significantly - we are observing a solid rise of US yields, which puts pressure on gold. Price pulled back 1.5% below $1950 and approaches the local lows of March 21/22 and 38.2 Fibonacci retracement of the last upward wave.​

 

[Solid ECN]

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AUDUSD​

• US indices finished yesterday's trading mostly higher with tech shares lagging behind. S&P 500 gained 0.16%, Dow Jones moved 0.60% higher and Russell 2000 added 1.08%. Nasdaq dropped 0.47%​
• Indices from Asia-Pacific traded mostly higher today as well. Nikkei gained 0.2%, S&P/ASX 200 traded 1% higher, Kospi added 0.8% and Nifty 50 dropped 0.2%. Indices from China traded mixed​
• DAX futures point to a slightly higher opening of the European cash session today​
• Jose Manuel Campa, chair of European Banking Authority, warned in an interview with Handelsblatt that risk in the financial system remains very high and that increasing interest rates are weighing on financial markets​
• French finance minister Le Maire said that France wants to cut the deficit to 3% of GDP by 2027. French budget deficit stood at 4.7% of GDP and was lower than 5% target set by the government​
• Russia announced that it has carried out anti-ship missile tests in the Sea of Japan in a move that is seen as response to Japanese PM Kishida visiting Ukraine last week​
• Goldman Sachs now estimates probability of US economy falling into recession within the next 12 months at 35%, up from previous 25%​
• Fed's Jefferson said that inflation has been longer lasting and that current policy rate is too high​
• Israeli Prime Minister Benjamin Netanyahu withdrew a judicial reform that spark nationwide protests​
• Australian retail sales increased 0.2% MoM in February (exp. 0.3% MoM)​
• Cryptocurrencies are trading mixed - Bitcoin drops 0.9%, Dogecoin trades 0.6% lower, Ethereum gains 0.3% and Ripple jumps almost 2%​
• Energy commodities trade mixed - oil drops 0.3-0.4% while US natural gas prices climb 0.7%​
• Precious metals trade mostly lower - silver and platinum drop around 0.1% each while palladium trades 0.5% lower. Gold is an outperformer with 0.2% gains​
• AUD and JPY are the best performing major currencies while USD and EUR lag the most​

In spite of a miss in Australian retail sales data for February, AUD is one of the best performing G10 currencies today. AUDUSD trades 0.6% higher today and has managed to break above the 200-hour moving average (purple line).​

 

[Solid ECN]

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GBPUSD​

Andrew Bailey, governor of the Bank of England, as well as two other BoE members (Sam Woods and Dave Ramsden) appeared before the Treasury Select Committee today for a hearing on Silicon Valley Bank collapse. Bailey noted that collapse of SVB was the fastest banking failure since Barings Bank failure, which collapsed in 1995 following massive 827 million GBP loss incurred by trader Nick Leeson. However, those two cases cannot be compared as Barings failed due to rogue trader actions while SVB collapsed due to bank run and poor interest rate risk management. Speaking on Credit Suisse, Bailey said that problems of Swiss bank were company-specific and should not be seen as a risk for domestic banks. Overall, Bailey said that does not think that any of the features of recent banking failings (SVB and CS) are causing stress in the UK financial system. He said, however, that we are in a period of heightened tensions in the markets and higher levels of alertness are needed.

Bailey's comments today were in-line with his remarks yesterday, when he noted that UK rate setters are unlikely to be distracted from fighting inflation by troubles of the global banking system. GBP saw some weakness following Bailey's comments today but the move immediately after remarks was barely noticeable. Taking a look at GBPUSD chart at D1 interval, we can see that the pair has reached the resistance zone marked with 50% retracement of the downward move launched in June 2021. Pair attempted to break above it last week but failed and today's attempt also looks to be under question. GBPUSD erased gains from earlier today, painting a long upper wick on D1 interval. However, should we see a break above this zone, the 1.2440 area, marked with local highs from previous months, could be the next target for buyers. On the other hand, failure to break above could see the price pull back towards the support zone marked with 38.2% retracement and 200-session moving average (purple line).​

 

[Solid ECN]

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USD unimpressed by Consumer Confidence data​

US Consumer Confidence Index rose to 104.2 from 102.9 in March (revised to 103.4). Today’s reading came in above analysts’ estimates of 101.​

• Present situation index 151.1 vs 153 prior​
• Expectations index 73.0 vs 69.7 prior​
• 1 year inflation 6.3% vs 6.3% prior​
• Jobs hard-to-get 10.3 vs 10.5 prior​
• 14.9% expect their incomes to increase, up from 14.4% last month​

Conference Board Confidence index moved higher in March, however inflation expectations still remain high, which is not what FED would like to see.

Simultaneously, Richmond manufacturing index for March was released. The index unexpectedly fell less than expected to -5 from-16 in February, while analysts’ expected -10.0 pointing to a modest improvement in business conditions. Of its three component indexes, shipments saw the largest change (up to 2 in March from -15 in February) and both the employment (-5 vs -7) and new orders (-11 vs -24) indexes improved but remained in negative territory. Firms continued to report easing of supply chain constraints as the indexes for backlogs and lead times remained negative. The average growth rate of prices paid decreased moderately, while the average growth rate of prices received changed little in March. Firms remained pessimistic about local business conditions and the index for future local business conditions edged down slightly.

EURUSD saw relatively small reaction to today’s data releases. The most popular currency pair continued to trade around 1.0820 level.​

 

[Solid ECN]

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USDCAD​

USDCAD finally managed to break below the key short-term support at 1.3655. According to the Overbalance methodology, this may point to a change of the main sentiment to bearish. The level of 1.3655 should be treated as the first line of resistance. In turn, nearest support to watch can be found around 1.3535 and 1.3475 levels.

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[Solid ECN]

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AUDUSD​

• US indices finished yesterday's trading slightly lower. S&P 500 dropped 0.16%, Dow Jones moved 0.12% lower and Nasdaq plunged 0.45%. Small-cap Russell 2000 index dropped 0.06%​
• Indices from Asia-Pacific are trading higher today. Nikkei gained 1.1%, S&P/ASX 200 traded 0.2% higher, Kospi traded flat and Nifty 50 gained 0.1%. Indices from China traded 0.1-0.2% higher while Hong Kong's Hang Seng gains over 2%​
• DAX futures point to a slightly higher opening of the European cash session today​
• US Energy Secretary Granholm said that refilling of strategic petroleum reserve may start this year​
• Shinichi Uchida, deputy governor of Bank of Japan, said that if 10-year Japanese yield climbs to 2%, BoJ will experience an unrealized loss of 50 trillion JPY on its bond portfolio (currently 10-year yield sits at 0.3%)​
• United States said that China shouldn't overreact to Taiwan president's visit to the United States. This comes after China warned that meeting between US officials and Taiwan president would be seen as provocation​
• Lee Bokhyun, head of South Korean financial regulator, said that South Korean authorities will consider lifting the short-selling ban this year. Ban was imposed early in the Covid pandemic​
• Australian CPI inflation decelerated from 7.4 to 6.8% YoY in February (exp. 7.4% YoY). Core inflation dropped from 7.6% in January to 6.9% YoY in February​
• API report pointed to a 6.08 million barrel draw in US oil inventories (exp. +0.2 mb)​
• Cryptocurrencies trade higher - Bitcoin gains 1.3%, Ethereum adds 1.1% and Dogecoin jumps 2.4%​
• Energy commodities trade mixed - oil gains slightly while US natural gas prices drop​
• Precious metals pull back amid USD strengthening - gold drops 0.5%, silver trades 0.7% down and platinum dips 0.6%​
• NZD and USD are the best performing major currencies while JPY and AUD lag the most​

AUD is pulling back after a lower-than-expected CPI reading for February. AUDUSD failed to break above the 0.6710 resistance zone and is now pulling back towards the 200-hour moving average (purple line).​