<p style=““ class=“text-align-justify“>Once again, just when you thought we might be in for a calmer trading today, there just had to be a twist and it now comes right before we get into North America trading. Bond yields are on the retreat with 2-year yields in the US falling to the lows for the day, down 5 bps to 4.08% while 10-year yields are down 10 bps to 3.48%. This is taking USD/JPY down with it as the pair is down by over 100 pips now to 132.50 levels:</p><p style=““ class=“text-align-justify“>The pair has been struggling to get above its 100-hour moving average (red line) earlier today and this is keeping sellers in near-term control, with sentiment in the bond market vindicating the technicals.</p><p style=““ class=“text-align-justify“>Elsewhere, equities are also starting to come under pressure with European indices paring all of its earlier gains and US futures dropping into the red as mentioned <a target=“_blank“ href=“https://www.forexlive.com/news/equities-start-to-run-into-a-bit-of-trouble-20230317/“ target=“_blank“ rel=“follow“>here</a>.</p>

This article was written by Justin Low at www.forexlive.com.

<p>On the daily chart below, we can
see that the buyers are trying hard to defend the 133 handle as depicted by the
long candlesticks wicks. </p><p>The technicals and the
fundamentals are working against the buyers at the moment though. The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> have crossed to the downside, which may be an early signal of a change
in trend. </p><p>The Treasury yields keep falling
as the market is expecting the Fed to stop its tightening cycle soon and
deliver rate cuts earlier than expected. </p><p>The market will now look at the
FOMC meeting next week and the economic data to decide if the trend is indeed
downwards now or the market overreacted to the banking ”crisis”. </p><p>On the 4 hour chart below, we can
see that the selling momentum is weakening as shown by the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>divergence</a> between the price and the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a> right at the 133 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a>. </p><p>We have also the support from the
50 and 61.8% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> levels of the entire upward move since the
gamechanger February NFP report. The sellers may now try another push lower
towards the 61.8% level expecting a dovish Fed.</p><p>On the 1 hour chart below, we can
see that the price may be forming a <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“>falling
wedge</a> pattern. This is generally a reversal pattern, so the buyers will look
for the price to break above the blue trendline to start piling in with more
conviction. </p><p>We may get another push lower
from the sellers as the Fed next week is expected to hike by just 25 bps
instead of the 50 bps that the market was fearing just a week ago. If the Fed
delivers a hawkish 25 bps hike or even surprises with a 50 bps move, then we
may see a quick rally in the pair. Otherwise, the sellers will remain in
control. </p>

This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>S&amp;P 500 futures are now down 8 points, or 0.2%, on the day with Dow futures down 0.4% as the anxiety holds. Looking at bank stocks, Credit Suisse shares are extending its fall, down 9% at the moment as the pressure is not alleviating towards the end of the week.</p><p style=““ class=“text-align-justify“>And the tensions and nerves are just going to be even more palpable later when Wall Street steps into the fray.</p>

This article was written by Justin Low at www.forexlive.com.

<p>On the daily chart below, we can
see that the key <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 32684 was breached and the
sellers started to pile in pushing the price to new lows. The market fell as
the Silicon Valley Bank failed last Friday causing risk aversion across the
board. On Monday and Tuesday the market rebounded a little as the actions taken
by the Treasury and the Fed calmed the markets. </p><p>Yesterday, the fears came from
Europe as Credit Suisse was once again under stress. Later in the day the SNB
offered support for the bank and the market bounced again. The sellers are in
control, but they are struggling to push lower as expectations of rate cuts are
giving the buyers some fuel to keep pushing up. </p><p>The sellers may want to wait for
the price to pull back to the support now turned resistance, the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> and the red long period <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
average</a> as the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-confluence-20220318/“>confluence</a> of all these technicals gives a
strong level where they can lean on with defined risk.</p><p>On the 4 hour chart below, we can
see that the resistance at 32684 has also the 50 and 61.8% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> levels. There’s also a <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>divergence</a> between the price and the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a> signalling that the selling
momentum is weak and we may indeed see a pullback. From a risk management
perspective, the best thing to do for the sellers is to wait for the price to
come to that resistance and lean on it with defined risk. </p><p>In the 1 hour chart below, we can
see that at the moment there’s some selling pressure. If we see the buyers
pushing the price above the orange swing resistance at 32245, then we may see
them extend the rally to the 32684 level. On the other hand, if the sellers
manage to break the orange swing low at 31640, then they may extend the
selloff.</p>

This article was written by ForexLive at www.forexlive.com.

<p style=““ class=“text-align-justify“>In the short-term, the actions overnight <a target=“_blank“ href=“https://www.forexlive.com/news/credit-suisse-group-takes-steps-to-improve-liquidity-20230316/“ target=“_blank“ rel=“follow“>here</a> should help but that doesn’t fix the long-term strategy and overall outlook of the firm. At this stage, I would say that an eventual takeover by another bank is still arguably the most probable outcome for Credit Suisse.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>The general line of thinking is that markets could possibly fall apart if the ECB goes with a 50 bps rate hike today. That comes of course after all the concerns of a banking crisis this week, which started from Silicon Valley Bank’s collapse to Credit Suisse’s capital distress.</p><p style=““ class=“text-align-justify“>The fact that <a target=“_blank“ href=“https://www.forexlive.com/news/what-does-the-market-pricing-say-about-credit-suisse-right-now-20230315/“ target=“_blank“ rel=“follow“>CDS swaps</a> in the latter were showing that the underlying scenario is akin to a „this is not a drill“ type of situation shows how worried markets have been this week over a breakdown in the global financial system. </p><p style=““ class=“text-align-justify“>Now, Credit Suisse has already tried to address its issues through a CHF 50 billion borrowing and some creative financial chemistry (as noted <a target=“_blank“ href=“https://www.forexlive.com/news/this-is-the-only-thread-you-need-to-understand-what-credit-suisse-is-doing-20230316/“ target=“_blank“ rel=“follow“>here</a>). But it remains to be seen if that is enough to turn the tide in markets.</p><p style=““ class=“text-align-justify“>Essentially, we are in a place where the longer it is that there is no bad news, that in itself is good news. As such, the timing of the ECB policy decision is a rather unfortunate one for policymakers. Now, they can’t just focus on what they have to do but take into account the market’s „feelings“.</p><p style=““ class=“text-align-justify“>If you were to have written an ECB preview before yesterday and arguably before European trading today, it would have been ripped up. I would say even <a target=“_blank“ href=“https://www.forexlive.com/centralbank/barclays-forecast-for-the-european-centralbank-meeting-today-is-a-25bp-rate-hike-20230315/“ target=“_blank“ rel=“follow“>Barclays‘ latest call</a> this morning for a 25 bps rate hike is pretty much invalid now.</p><p style=““ class=“text-align-justify“>Considering how markets have digested the mood music in European trading, I’m even more convinced that the ECB will go with a 50 bps rate hike later today.</p><p style=““ class=“text-align-justify“>They’ve made that clear in the sense that going up against inflation is their number one concern and with core inflation still running rampant in the euro area, there is no reason to back down – at least from this argument. Besides that, they have already in a way committed to this by telling markets that they would so for quite a while now.</p><p style=““ class=“text-align-justify“>If they were to relent, it would practically call into question their resolve and their entire policy in communicating with markets. The backlash that Lagarde will face in her interview would be immense.</p><p style=““ class=“text-align-justify“>But another reason why I think that they would stick with their call for a 50 bps rate hike is that they can address any market concerns in a confident and yet elegant manner, while delivering on tighter policy.</p><p style=““ class=“text-align-justify“>As mentioned earlier, the simplest step would be to adjust TLTRO terms and delay early repayments from banks. In that sense, they can roll them over to a later date and keep liquidity conditions sufficient and just kick any QT talks down the road for now.</p><p style=““ class=“text-align-justify“>There might yet be other tools but I would assume that policymakers will not see fit to disclose them or think about them too much now as the situation in markets is rather fluid. However, they should reinforce the notion that they will stand ready at any point in time to step in and shore up confidence in the banking sector, if need be.</p><p style=““ class=“text-align-justify“>Put those two elements together and a bend but don’t break reaction in markets is what the ECB can hope for later today.</p><p style=““ class=“text-align-justify“>As for the reaction in the euro, I would say that there is scope for an upside move with a 50 bps rate hike should markets be able to take that in with stride and not revert back to a risk-off wave.</p>

This article was written by Justin Low at www.forexlive.com.

<p style=““ class=“text-align-justify“>At the start of today, the odds of a 50 bps rate hike were only at 10%. But now with the market calm that has been permeating through the session, we are seeing traders digest the higher likelihood of a move much better. As mentioned earlier <a target=“_blank“ href=“https://www.forexlive.com/news/is-the-ecb-put-in-a-no-win-situation-20230316/“ target=“_blank“ rel=“follow“>here</a>, this should be the play by the ECB and I’ll elaborate more in a preview to come in a bit.</p>

This article was written by Justin Low at www.forexlive.com.

<p>On the daily chart below, we can
see that the broken <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> is still acting as support for
the market. The market sold into it last Friday as the Silicon Valley Bank
failed and triggered a widespread risk aversion which weighed on risk assets. </p><p>On Monday, we got another sell
into the trendline as the market was still uncertain on the banking sector but
rebounded as everything calmed down. </p><p>Yesterday, we got yet another selloff
into the trendline as the fear spread to Europe with Credit Suisse bank under
stress, but later on the market rebounded as the SNB offered support for the
bank. </p><p>All of this just shows that the
trendline support is very strong and it’s something that the sellers will need
to break to get conviction on more downside and make the buyers fold. </p><p>In the 4
hour chart below, we can see that now we have another range between the
trendline support and the 3971 <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> where we can also find the 50
and 61.8% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> levels. The buyers will need to break above that
resistance zone to start getting some conviction on an extension to the upside,
but the downward trendline could be another place where the sellers may lean
on. </p><p>In the 1
hour chart below, we can see more closely the current range. Looking ahead we
have the <a target=“_blank“ href=“https://www.forexlive.com/EconomicCalendar“>FOMC meeting</a> next week where the Fed is
expected to hike by 25 bps. The market may keep ranging until then. </p><p>Generally,
it’s better to sit out when the market starts to range and wait for a breakout
or a catalyst strong enough that can give the necessary momentum to break out
of such ranges. </p>

This article was written by ForexLive at www.forexlive.com.

<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/is-credit-suisse-the-reason-for-the-turn-in-the-market-20230315/“>Credit Suisse top shareholder rules out further financial assistance</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/what-does-the-market-pricing-say-about-credit-suisse-right-now-20230315/“>What does the market pricing say about Credit Suisse right now?</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/dollar-and-yen-pick-up-a-bid-as-the-jitters-return-20230315/“>Dollar and yen pick up a bid as the jitters return</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecb-reportedly-still-leaning-towards-50-bps-rate-hike-tomorrow-20230315/“>ECB reportedly still leaning towards 50 bps rate hike tomorrow</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurozone-january-industrial-production-07-vs-04-mm-expected-20230315/“>Eurozone January industrial production +0.7% vs +0.4% m/m expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/germany-february-wholesale-price-index-01-vs-02-mm-prior-20230315/“>Germany February wholesale price index +0.1% vs +0.2% m/m prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/france-february-final-cpi-63-vs-62-yy-prelim-20230315/“>France February final CPI +6.3% vs +6.2% y/y prelim</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/japan-pm-kishida-says-aiming-to-raise-minimum-wages-beyond-1000-nationwide-20230315/“>Japan PM Kishida says aiming to raise minimum wages beyond ¥1,000 nationwide</a></li></ul><p>Markets:</p><ul><li>JPY leads, EUR lags on the day</li><li>European equities lower; S&amp;P 500 futures down 1.6%</li><li>US 10-year yields down 11 bps to 3.526%</li><li>Gold up 0.8% to $1,916.43</li><li>WTI crude down 1.5% to $70.44</li><li>Bitcoin up 0.1% to $24,654</li></ul><p style=““ class=“text-align-justify“>The session started off with markets in a much calmer mood, with 2-year Treasury yields rising up to by 19 bps 4.41% and 2-year German bond yields also up by 9 bps to 3.01%. Equities were tentative but you had the sense that markets were slowly turning their focus and attention to central banks again as the SVB fallout recedes.</p><p style=““ class=“text-align-justify“>But then came along Credit Suisse’s own debacle as its top shareholder, the Saudi National Bank, says that it is not going to offer further financial assistance to the bank. That saw credit swaps blow up with the curve inverting deeply as markets are pricing in a serious risk of a default by the Swiss bank.</p><p style=““ class=“text-align-justify“>Bond yields plunged sharply with 2-year Treasury yields now down 23 bps to 3.99% and 2-year German bond yields down 33 bps to 2.59% on the day. That is a far cry from the highs seen earlier as the volatile swings continue in the bond market.</p><p style=““ class=“text-align-justify“>Banking stocks were pummeled with Credit Suisse itself down by over 20% and US futures, which were flattish at the start of the session, are now down heavily with European indices bordering on 3-4% losses across the board.</p><p style=““ class=“text-align-justify“>In FX, we are starting to finally see some action as the dollar and yen picked up strong bids while the euro and franc tumbled amid more idiosyncratic risks affecting the respective currencies.</p><p style=““ class=“text-align-justify“>EUR/USD fell from 1.0730 to just below 1.0600 now, down 1.3% on the day while USD/CHF moved up from 0.9150 to a high of 0.9260, before settling around 0.9215 now – up 0.8%.</p><p style=““ class=“text-align-justify“>USD/JPY was also a notable mover as it climbed up to hit 135.00 briefly before the turn in the bond market saw the pair fall all the way down to 133.40.</p><p style=““ class=“text-align-justify“>It’s now over to Wall Street to see how they will look upon their European counterparts to handle the mess and let’s also not forget that we have the <a target=“_blank“ href=“https://www.forexlive.com/news/uk-budget-in-focus-later-today-20230315/“ target=“_blank“ rel=“follow“>UK budget</a> coming up.</p>

This article was written by Justin Low at www.forexlive.com.

<p>On the daily chart below, we can
see the big rally in gold since the last Thursday. Everything started with <a target=“_blank“ href=“https://www.forexlive.com/news/us-weekly-initial-jobless-claims-211k-vs-195k-expected-20230309/“>jobless
claims</a> where we saw the first miss after several months of strong beats and
the treasury yields fell as the market started to look at a possible turn in
the jobs market. </p><p>On Friday, the <a target=“_blank“ href=“https://www.forexlive.com/news/us-february-non-farm-payrolls-311k-vs-205k-expected-20230310/“>NFP
report</a> showed a higher-than-expected unemployment rate and lower than expected
wage gains. This caused an extension of the selloff in yields that intensified
as the <a target=“_blank“ href=“https://www.forexlive.com/news/fdic-takes-control-of-silicon-valley-bank-20230310/“>Silicon
Valley Bank</a> failed. The market started to fear another banking
crisis and we saw risk aversion across the board. </p><p>On Monday, the risk sentiment
remained on the backfoot and the market repriced lower future interest rates
expectations with rate cuts by the end of the year and at some point even no
hike at the March FOMC meeting. All these events decreased real yields and gave
gold the tailwind to rally. The <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> have now crossed to the upside in a sign that we may be in front of
another rally that could extend beyond the 2000 level.</p><p>On the 4 hour chart below, we can
see that the price is now pulling back from stretched longs. The best level for
the buyers would be the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 1864 with the 50% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level. One reason for the bigger pullback may be
that the <a target=“_blank“ href=“https://www.forexlive.com/news/us-february-cpi-60-yy-vs-60-expected-20230314/“>US
CPI</a> report
yesterday showed that inflation is still too high in US and the Fed may be
forced to keep hiking even if there are stresses elsewhere. </p><p>On the 1 hour chart below, we can
see that we may have a bullish <a target=“_blank“ href=“https://www.forexlive.com/Education/chart-patterns-guide-20220125/“>flag
pattern</a> if the price manages to break the upper band of the channel. Buyers
will want to wait for the breakout to start piling in and push the price to new
higher highs. Sellers may want to lean on the 1902 level to position short
targeting the 1864 support. That will be the last line of defence for the
buyers. </p>

This article was written by ForexLive at www.forexlive.com.