Market Talk
– The U.S. dollar languished near a multi-week low on Tuesday as fears of a broader systemic crisis following the collapse of a U.S. tech-focused lender left traders speculating that the Federal Reserve could pause its aggressive rate-hiking cycle.
– Over the weekend, U.S. authorities launched emergency measures to shore up banking confidence in the wake of the sudden collapse of Silicon Valley Bank (SVB) and Signature Bank. The fallout sent traders scaling back their bets on how much further the Fed would continue raising interest rates sending the U.S. dollar tumbling.
– The greenback was marginally higher against the Japanese yen at 133.42 on Tuesday morning, having slid 1.4% on Monday. Sterling edged down to $1.2159, though it remained near its one-month peak of $1.2200 hit in the previous session. The euro fell to $1.0719, but was likewise not far from Monday’s one-month top of $1.0748.
– The Aussie fell 0.29% to $0.6648, reversing some of its 1.3% jump in the previous session, while the kiwi shed 0.18% to stand at $0.6209, having similarly surged 1.4% on Monday.
– Gold prices stuck to a near six-week high above $1900 on Tuesday as concerns over a U.S. banking crisis saw investors scramble for traditional safe havens, with focus now turning to upcoming inflation data later in the global day for more cues on monetary policy.
Chart Focus NZD/USD
Key Points
1. Buy NZD/USD recommendation.
2. Buy NZD/USD at 0.6175. Stop at 0.6145 and profit target at 0.6260.
3. A banking crisis is likely to delay a Fed hike and is likely to weigh on the US dollar.
4. Price is likely to be supported by the 20EMA line with MACD hinting at a bullish price trend.
Fundamental Comments
1. A U.S. banking crisis is likely to weigh on the U.S. dollar.
2. A US banking crisis may also delay the Fed hike cycle which is likely to weigh on the US dollar.
Technical Comments
1. Price is likely to be supported by the 20EMA line as well as a previous resistance turned support line.
2. MACD is bullish and is hinting at a bullish price trend.
Key Levels
| Support | 0.6195 | 0.6160 | 0.6120 |
| Resistance | 0.6230 | 0.6275 | 0.6310 |
Technical Overview
USD/JPY – We saw a decline to 133.27 on Monday as result from SVB and Signature Bank’s failure. Price took a breather this morning as the Federal Reserve moved to cap the fall out, moving up to 134.06 this morning. We think price is likely to be capped by the 20EMA at 134.60 and we are likely to see price decline to 132.27 again in the next 48 hours. While MACD and 20EMA are both hinting at a bearish price trend, stochastic is hinting at a limited downside.
| Support | 133.25 | 132.60 | 132.25 |
| Resistance | 133.95 | 134.60 | 135.05 |
EUR/USD – We had a buy call yesterday at 1.0700 which was filled when price declined to a low of 1.0650. Unfortunately, the decline also triggered our stop at 1.0670. After the dip, price had a rally to 1.0748 but has moved lower this morning. We are expecting a decline to the 20EMA line at 1.0655. From there we could see a rally to 1.08 again in the next few days. However, this view will also depend on the inflation data that will be released later tonight.
| Support | 1.0665 | 1.0635 | 1.0590 |
| Resistance | 1.0705 | 1.0745 | 1.0790 |
GBP/USD – Price moved above the resistance high of 1.2145 overnight to reach a high of 1.2199. We are likely to see price supported at 1.2140 and a rally to follow in the next 48 hours to 1.2265. Stochastic is in the overbought position and is hinting at a limited upside. MACD and 20EMA are both hinting at a bullish price trend. We see price moving higher to 1.2265. Only a price move below 1.2020 would negate our bullish view.
| Support | 1.2140 | 1.2080 | 1.2040 |
| Resistance | 1.2195 | 1.2240 | 1.2270 |
XAU/USD – Price broke above the Shooting Star candlestick’s high yesterday and continued the rally to a high of $1914.60. Stochastic is in the overbought zone and is hinting at a price decline. However, MACD and 20EMA are both hinting at a strong bullish price trend. We remain cautious and see a limited upside to $1921.50. Tonight inflation data will also play a big role in the next price movement.
| Support | 1900.35 | 1885.56 | 1871.30 |
| Resistance | 1914.60 | 1927.30 | 1942.05 |
USD/CAD – Price had made a high at 1.3861 last week and a price decline had sent price lower to 1.3676 overnight. We think the current corrective rally in price is likely to be halted by the 20EMA line at 1.3755 and from here are we likely to see a decline to 1.3620 in the next 48 hours. Stochastic is close to the oversold zone and is hinting at a limited downside but 20EMA and MACD are both hinting at a bearish price trend ahead.
| Support | 1.3710 | 1.3675 | 1.3620 |
| Resistance | 1.3755 | 1.3800 | 1.3860 |