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Wall Street indices took a hit yesterday after Powell struck a hawkish note during semi-annual hearings before the Senate Banking Committee. Fed Chair hinted that the pace of rate hikes may accelerate back to 50 basis points if economic developments warrant it. Yields and US dollar caught a bid while S&P 500 plunged 1.53% and moved below the 4,000 pts mark. However, an attempt to climb back above this hurdle can be spotted on the S&P 500 futures market today (US500).

Fed Chair Powell is set to appear on Capitol Hill today for the second day of hearings but as text of the speech will remain unchanged from yesterday, this may not be as big of a volatility event as yesterday. However, traders will be offered ADP employment report for February 2023 today at 1:15 pm GMT and it will be a final hint ahead of Friday's NFP report for February. Market expects ADP report to show a jobs gain of 200k, down from +106k signaled by API for January but also significantly below +517k shown by NFP report for January. A point to note is that US CPI report for February will be released on Tuesday next week and those 2 pieces of data (jobs report and inflation data) are likely to be key for the upcoming FOMC decision (March 22, 2023). Currently money markets price in around 40 basis points of tightening for the meeting and strong jobs report compared with still-high inflation could see those move even closer to 50 basis points. Taking a look at S&P 500 futures chart (US500) at the H1 interval, we can see that the index took a big hit yesterday following Powell's hearings at Congress. Drop was halted at the 3,985 pts short-term support zone and an attempt to launch a recovery move can be spotted today. Index made an attempt at breaking above the 4,000 pts resistance zone, marked with previous price reactions as well as 200-hour moving average (purple line), but bulls were unable to break above. While the first attempt failed, index remains nearby and another attempt cannot be ruled out, especially if ADP data comes in softer than expected.

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USDCAD - Growth is possible

If the assumption is correct, the USDCAD pair will grow to the area of 1.3850 – 1.3977. In this scenario, critical stop loss level is 1.3554.

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USDCHF -Growth is possible.

If the assumption is correct, the USDCHF pair will grow to the area of 0.9600 – 0.9819. In this scenario, critical stop loss level is 0.9287.

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Bitcoin

BITCOIN deepened declines yesterday after Silvergate Capital announced liquidation of Silvergate Bank. The coin is making another test of the $21,500 support zone.


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EURUSD

The EURUSD pair didn’t show any strong move yesterday, to settle near 1.0515, noticing that stochastic begins to lose the positive momentum gradually, while the EMA50 forms negative pressure against the price.

Therefore, we will continue to suggest the bearish trend for the upcoming period, and the targets begin by breaking the mentioned level to confirm heading towards 1.0440 as a next negative station, noting that breaching 1.0635 will stop the expected decline and lead the price to turn to rise.

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GBPUSD

The GBPUSD pair fluctuates around 1.0840 level since yesterday, and continues to move within the correctional bearish channel, waiting to resume the bearish bias that its next main target located at 1.1625, supported by stochastic loss to the positive momentum clearly.

By taking a deeper look at the chart, we find that the price completed forming double top pattern that hast negative targets that surpass the above mentioned level to reach 1.1370 areas, to suggest the domination of the bearish trend on the longer term basis. Therefore, we are waiting for more decline in the upcoming sessions, supported by the negative pressure formed by the EMA50, reminding you that it is important to hold below 1.1940 to achieve the waited targets.


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EURJPY

The EURJPY pair didn’t succeed to exit the sideways range until this moment, to keep fluctuating between 145.5 resistance and 144 support.

The above chart shows that stochastic begins to provide the negative momentum, to increase the chances of forming new negative waves, and expect to crawl below the current support to reach many negative stations that might start at 143.25 followed by 142.2, to press on the moving average 55.

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NATGAS

The US Energy Information Administration reported today that domestic supplies of natural gas decreased by-84 billion cubic feet for the week ended February 24 from -81 bcf in the previous week, while analysts’ expected drop of -80 billion cubic feet.

Still, it is much less than a decrease of 126 bcf in the same week last year and a five-year (2018-2022) average decline of 101 bcf as mild weather kept heating demand for the fuel low. Last week's decrease cut stockpiles to 2.030 trillion cubic feet (tcf), 493 bcf higher than last year at this time and 359 bcf above the five-year average of 1.671 tcf.

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USDCHF

The USDCHF pair traded with clear negativity yesterday, and ended trades near 0.9316, noticing that the price begins today with additional negativity to attack this level and attempt to confirm breaking it, which makes us prefer to stay aside until we get clearer signal for the next trend, through monitoring the price behavior according to the mentioned level.

Note that confirming breaking the mentioned support will press on the price to achieve more decline and return to the main bearish track, to head towards achieving negative targets that start at 0.9220 and extend to 0.9135, while consolidating above it will lead the price to resume the correctional bullish track that its next main target located at 0.9475.

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EURUSD

The EURUSD pair begins today with additional positivity to surpass 1.0645 level and settles above it, which pushes the price to achieve more intraday gains, targeting testing 1.0745 as a next station, noting that breaching this level will push the price to continue rising and head towards 1.0800 followed by 1.0925 levels as next main targets.

Moving above the EMA50 supports the continuation of the expected bullish trend, while stochastic might cause some temporary sideways fluctuation before resuming the bullish bias. On the other hand, we should note that breaking 1.0645 and holding below it will stop the suggested bullish wave and press on the price to decline again.

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GBPUSD

The GBPUSD pair rallied upwards to confirm breaching the correctional bearish channel’s resistance, which stops the correctional bearish trend and lead the price to attempt to regain the main bullish trend again, on its way to achieve positive targets that start at 1.2260 and extend to 1.2440.

Therefore, the bullish bias will be suggested for today, it might be preceded by some temporary sideways fluctuation affected by stochastic negativity, waiting to gather positive momentum that assists to push the price to achieve the expected targets. Note that breaking 1.2050 will put the price under intraday negative pressure that targets testing the most important support at 1.1940 before any new attempt to rise.

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DE30

European indices launched today's trading little changed after Fed and US Treasury stepped in to limit contagion risk from SVB collapse. However, issues may not be over as SVB is not the only bank with problems. Signature Bank has been shut down by regulators over the weekend due to systemic risk concerns. Meanwhile, another US bank may be facing collapse - First Republic Bank. This bank is trading 60% lower in US premarket session right now and it has dented moods on the markets following European cash session open.

German DAX slumped around 200 points during the first hour of the cash trading session. Index erased all of the overnight gains, dropped to the lowest level since March 2, 2023 and is now attempting to break below the 15,230 pts support zone at press time.

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USDJPY

The USDJPY pair continued to decline strongly to reach the thresholds of the negative target mentioned in our last technical update at 133.30, starting today with additional negativity to support the chances of continuing the bearish bias in the upcoming sessions, noting that breaking the mentioned level will extend the bearish wave to reach 131.75 areas as a next main station.

Note that the continuation of the bearish wave depends on the price stability below 135.40, as breaching it will push the price to recover and head towards achieving gains that start by testing 137.70 areas.

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US30

US index futures traded significantly higher this morning after the Fed and US Treasury stepped in to limit contagion risk from SVB collapse. Emergency lending program was announced that will allow banks to access liquidity needed to service deposits. US Treasury Secretary Janet Yellen approved necessary decisions assuring that bank deposits are protected and announced that all depositors will be able to access. While broad market performance on Monday morning showed that the situation has calmed, problems may not be over yet. SVB collapsed and FDIC took control over it while Signature Bank was shut down by regulators due to systemic risk following SVB collapse. However, another bank is rumored to be close to collapsing - First Republic Bank. Shares of this bank are trading 60% lower in premarket today and it is said to be the next in-line should the domino effect continue. Slump in First Republic Bank shares are dragging down the whole market with DAX and other European blue chips indices trading 2-3% lower on the day. US equity futures erased all of the gains and are now trading flat or slightly lower compared to Friday's closing prices.

Taking a look at Dow Jones futures chart (US30) at D1 interval, we can see that all of the gains made earlier today were erased already and now the index is trading lower. The index tested resistance zone marked with 38.2% retracement and 200-session moving average this morning but has pulled back since and is now testing support zone ranging around 31,750 pts area.

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USDCHF

The USDCHF pair broke 0.9316 level strongly to complete forming double top pattern that its signs appear on the chart, to surpass the negative target mentioned in our last report at 0.9220 and opens the way to continue the decline towards 0.9135 areas, waiting for more bearish bias in the upcoming sessions.

Note that surpassing the last level will push the price to visit the recently recorded low at 0.9060, while breaching 0.9220 will stop the negative scenario and push the price to start recovery attempts that target testing 0.9316 level initially.

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EURUSD
The EURUSD pair found solid resistance at 1.0745 and couldn’t manage to breach it, to start providing negative trades by today’s open, noticing that stochastic shows negative signals that press on the price to decline.

Therefore, we expect to witness bearish bias in the upcoming sessions, and the targets begin at 1.0620 and extend to 1.0515 after surpassing the previous level, noting that breaking 1.0690 will ease the mission of achieving the waited targets. Note that breaching 1.0745 will stop the suggested negative scenario and lead the price to achieve new gains that reach 1.0800 followed by 1.0925.

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US2000

 

1. US indices finished yesterday's trading lower, following a volatile session. S&P 500 dropped 0.15%, Dow Jones moved 0.28% lower and Russell 2000 slumped 1.60%. Nasdaq was outperformer and gained 0.45%
2. Some relief can be spotted on the bond markets with US 2-year yield climbing 15 basis points today, following an over-100 basis point slump yesterday. 2-year US yield sits around 4.17-4.18% today
3. Indices from Asia-Pacific traded lower today. Nikkei plunged 2.2%, S&P/ASX 200 moved 1.4% lower, Kospi slumped 2.5% and Nifty 50 traded 0.6% down. Indices from China traded 0.4-2.2% lower
4. DAX futures point to a flat opening of the European cash session
5. Fed Chair Powell said that thorough, transparent and swift review of SVB failure is needed. Results of the review will be published at the beginning of May
6. Canadian regulator will boost monitoring and begin daily check-ins with domestic banks in an attempt to prevent SVB-like banking collapse in Canada
7. Suzuki, finance minister of Japan, said that he does not expect significant financial impact from SVB collapse on Japanese financial system
8. US National Security Adviser Sullivan said that the Biden-Xi phone call will take place after the Chinese National Party Congress ends. No comment on topics to be discussed was offered
9. Nomura expects Fed to deliver a 25 bp rate cut and QT pause announcement at next week's FOMC meeting. BlackRock does not expect FOMC to halt rate hike cycle as response to SVB was swift, decisive and situation is not repeat of 2008
10. According to Global Times report, Chinese authorities are considering increasing retirement age as the country is beginning to struggle with rapidly aging population
11. South China Morning Post reports that Russia has agreed to 60-day extension to Russia-Ukraine grain deal
12. Australian household spending dropped 01.% MoM in February
13. Cryptocurrencies are trading relatively little changed following yesterday's rally. Bitcoin gains 1%, Ethereum drops 0.2% and Dogecoin traded 0.7% lower
14. Oil is trading 0.8-0.9% lower this morning while gold drops 0.1%
15. NZD and CAD are the best performing major currencies while JPY and EUR lag the most

Russell 2000 (US2000) was the worst performing major Wall Street index yesterday, dropping over 1.5%. As fallout from SVB collapse is likely to be limited to smaller banks, small-cap index is taking a much bigger hit than S&P 500 or Dow Jones.

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GBPUSD
The GBPUSD pair resumed its positive trades to test 1.2200 barrier, reinforcing the expectations of continuing the bullish trend, waiting for more rise to visit 1.2260 level that represents our next target.

The EMA50 supports the price from below, and surpassing the targeted level will push the price to 1.2440 as a next main station, while stochastic negativity might cause some temporary sideways fluctuation before rising again. Holding above 1.2070 represents the first condition to continue the bullish wave, as breaking it represents negative factor that will press on the price to visit 1.1940 initially.

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USDJPY

The USDJPY pair surpassed 133.30 level and approached 132.00 barrier, but it bounced bullishly to settle around the first level, noticing that the price begins today positively to move away from this level, which hints heading to start bullish wave that we expect to target 135.40 areas initially.

Therefore, the bullish bias will be suggested for today, supported by stochastic positivity that appears on the four hours’ time frame, being aware that breaking 133.30 will stop the expected rise and press on the price to suffer additional losses that reach 131.75 as a next negative target.

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USDCHF

The USDCHF pair continued to decline to surpass our waited target at 0.9135 and reach few pips away from the recently recorded low at 0.9060, noticing that the price begins to rebound bullishly to build bullish wave that we expect to target 0.9220 followed by 0.9316 levels as next positive stations.

Therefore, the bullish bias will be expected for today, supported by stochastic positivity, noting that breaking 0.9060 will stop the expected rise and press on the price to resume the main bearish wave.

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