FX Commentary – Safe Havens Advanced On Credit Suisse’s Woe

Market Talk
– Safe haven currencies like the U.S. dollar and the yen were in bid on Thursday on renewed fears of a global banking crisis, after contagion from the implosion of U.S.-based Silicon Valley Bank had spread across the Atlantic to Swiss bank Credit Suisse.

– The euro was nursing deep losses in early Asia trade at $1.0582, after tumbling 1.4% in the previous session ahead of ECB monetary policy decision later today. Traders’ bets on a 50-basis-point rate hike have evaporated as the rout in Credit Suisse shares fanned concerns about the health of Europe’s banking sector.

– Sterling gained 0.18% to $1.2077, having fallen close to 0.9% on Wednesday. The yen jumped about 0.5% in early Asia trade and last stood at 132.73 per dollar, extending Wednesday’s 0.6% gain.

– The Aussie was last at $0.6634, after Australian data showed employment rebounded by a strong 64,600 in February, while the jobless rate fell back to 3.5%. Upbeat result would have added to the case for the RBA to hike interest rates again at its next meeting in April.

– Gold solidified its hold on the $1,900 perch on Wednesday, hitting a new six-week high at $1937.03, as the U.S. banking crisis that began with California’s Silicon Valley Bank turned global with a heightened focus on the troubled finances of leading European investment banker Credit Suisse.

Chart Focus GBP/USD

Key Points

1. Sell GBP/USD recommendation.

2. Sell GBP/USD at 1.2080. Stop at 1.2110 and profit target at 1.2005.

3. Credit Suisse’s woe and interest rate differential are both weighing on the pound.

4. Price is likely to be capped by the 20EMA line with MACD hinting at a bearish price trend.

Fundamental Comments

1. Credit Suisse’s woe is likely to weigh on the pound.

2. Interest rate differential is in the U.S. dollar favour.

Technical Comments

1. Price is likely to be capped by the 20EMA line.

2. MACD is bearish and is hinting at a bearish price trend.

Key Levels


Technical Overview

USD/JPY – Price reached a high of 135.10 yesterday which was just shy of the Fibonacci 62% correction point at 135.20. This was followed by another decline below the previous low at 132.27 to a low of 132.20. MACD had given a potential divergence warning hinting at a potential price low. Stochastic is also hinting at a possible price low. However, 20EMA is hinting at a strong bearish price trend.


EUR/USD – Price reached a low of 1.0517 overnight and we have seen a rally to a high of 1.0615 at the point of this writing. We are expecting the 20EMA line at 1.0640 to cap this rally. We are looking at another decline to 1.0517 again. Stochastic is hinting at a price rally but MACD and 20EMA are hinting at a price decline. However, tonight ECB monetary policy meeting could have a strong bearing on the next direction.


AUD/USD – Price was capped by the 20EMA line at 0.6715 and is currently close to the low at 0.6563. 20EMA and MACD remain bearish and are hinting at a bearish price trend. Stochastic is hinting at a price rally. We think if price can stay above the previous day’s low, we are likely to see a rally back to 0.6780 in the next few days. A move below 0.6563 would negate our bullish price view.


XAU/USD – Price reached a new six-week high at $1937.03 overnight but this high was accompanied by a divergence warning from the MACD indicator, hinting at a possible price high. Stochastic is also hinting a possible price decline. 20EMA is hinting at a continuation of the bullish price trend. We think price is likely to move lower today to the previous support level at $1885. A move above the 6-week high would negate our bearish view.


USD/CNH – We had a sell recommendation at 6.9225 yesterday but price only reached a high of 6.9140 and our entry order was not filled. Indicators are hinting that the upward correction may not be over and we could see a price higher to 6.9260 in the next 24 hours. However a price move above 6.9410 would negate our bearish price view and hinting at a bigger rally to 7.00 in the near future.


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