Market Talk
– The U.S. dollar weakened on Friday after U.S. labour data for February showed slower wage growth, suggesting an easing of inflation pressures may keep the Federal Reserve’s pace of interest rate hikes modest and thereby reduce the greenback’s appeal.
– The U.S. economy added jobs at a brisk clip in February, but slower wage growth and a rise in the unemployment rate prompted financial markets to dial back expectations for a 50-basis point rate hike when Fed policymakers meet in two weeks.
– The yield on benchmark 10-year Treasury notes fell more than 22 basis points to under 3.70% in the biggest single-day drop in four months, on news of the closing of SVB Financial group, largest bank failure since the financial crisis. The Japanese yen strengthened 1.01% to 134.79 per dollar.
– The euro was up 0.86% to $1.0731, hovering near the one-month high of $1.0737 it scaled earlier. Sterling was trading at $1.2139, up 0.92% on the day. The Australian dollar surged 1.41% to $0.667, while the kiwi gained 1% to 0.6200.
– Gold prices hit a one-month high on Monday at $1,878.92 an ounce, recovering sharply from recent losses as markets bet that a burgeoning banking crisis in the U.S. will push the Federal Reserve into softening its hawkish rhetoric in the coming days.
Chart Focus EUR/USD
Key Points
1. Buy EUR/USD recommendation.
2. Buy EUR/USD at 1.0700. Stop at 1.0670 and profit target at 1.0795
3. Expectation of a hike by the ECB and improved risk sentiment are both likely to weigh on the U.S. dollar.
4. A Double Bottom chart pattern and MACD are both hinting at a price rally.
Fundamental Comments
1. Expectation of a rate hike by ECB this Thursday is aiding the Euro.
2. Capping the fallout from SVB and Signature Bank has improved risk sentiment and weigh on the U.S. dollar.
Technical Comments
1. A Double Bottom chart pattern is hinting at a price rally.
2. MACD is bullish and hinting at a price rally ahead.
Key Levels
| Support | 1.0695 | 1.0645 | 1.0610 |
| Resistance | 1.0740 | 1.0800 | 1.0850 |
Technical Overview
USD/JPY – We saw a decline to 133.52 this morning as result from SVB and Signature Bank failure. The yen is likely to take a breather as the US Fed moved to cap the fall out. We may see another attempt in the next 24 hours to test the low at 133.52. A break of this low is likely to send price lower to 132.90 Stochastic is hinting at a limited downside but both MACD and 20EMA are both hinting at a price decline.
| Support | 134.15 | 133.55 | 133.15 |
| Resistance | 134.65 | 135.15 | 135.80 |
AUD/USD – Price has moved out of a Double Bottom chart pattern which is hinting at a price rally. Stochastic is hinting at a price rally. Both 20EMA and MACD are also hinting at a price rally. We think price is likely to move up to 0.6700 in the next 48 hours. A move above this resistance is likely to send price higher to 0.6775. However, failure to move above 0.6700 is likely to send price lower to 0.6560.
| Support | 0.6635 | 0.6595 | 0.6560 |
| Resistance | 0.6675 | 0.6705 | 0.6755 |
GBP/USD – Since reaching a low at 1.1802 last week, we have seen price rallied to a high at 1.2140 this morning. There is a strong resistance at 1.2145 and price will need to move above this resistance to continue its rally. Failure is likely to send price lower to 1.1980. Stochastic is hinting at a limited upside. However, MACD and 20EMA are hinting at a price rally. We see price moving above the resistance to 1.2265 in the next 48 hours.
| Support | 1.2070 | 1.2015 | 1.1980 |
| Resistance | 1.2140 | 1.2185 | 1.2220 |
XAU/USD – Price reached a high of $1893.35 this morning after the failure of 2 US banks raised risk sentiment, aiding the yellow metal. However, two Shooting Star candlesticks are hinting at a price decline ahead. Stochastic is also hinting at a possible price high and a decline ahead. However, MACD and 20EMA are both showing a bullish price trend. We see price moving lower to $1850 in a corrective decline in the next two days.
| Support | 1870.30 | 1858.80 | 1846.40 |
| Resistance | 1882.10 | 1893.35 | 1900.40 |
USD/CAD – Price had made a top at 1.3861 last week as price has currently moved below the 20EMA as well as moved below an important support level. We are expecting the decline to continue towards 1.3645 in the next couple of days. Stochastic is hinting at a price decline. Both MACD and 20EMA are also hinting at a price decline. Only a move above 1.386 will negate our bearish view for the next few days.
| Support | 1.3710 | 1.3665 | 1.3620 |
| Resistance | 1.3760 | 1.3815 | 1.3865 |