<p>Headlines:</p><ul><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-february-cpi-104-vs-99-yy-expected-20230322/“>UK February CPI +10.4% vs +9.9% y/y expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/hot-uk-inflation-data-adds-to-headache-for-boe-20230322/“>Hot UK inflation data adds to headache for BOE</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/cable-at-seven-week-highs-ahead-of-the-boe-tomorrow-20230322/“>Cable at seven-week highs ahead of the BOE tomorrow</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-lagarde-we-are-neither-committed-to-raise-further-nor-are-we-finished-on-rate-hikes-20230322/“>ECB’s Lagarde: We are neither committed to raise further nor are we finished on rate hikes</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-lane-there-are-reasons-to-believe-underlying-inflation-measures-will-ease-over-time-20230322/“>ECB’s Lane: There are reasons to believe underlying inflation measures will ease over time</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/centralbank/ecbs-nagel-backs-further-rate-hikes-plays-down-banking-turmoil-20230322/“>ECB’s Nagel backs further rate hikes, plays down banking turmoil</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/eurozone-january-current-account-balance-170-billion-vs-159-billion-prior-20230322/“>Eurozone January current account balance €17.0 billion vs €15.9 billion prior</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/opec-reportedly-likely-to-stick-to-existing-deal-until-the-end-of-the-year-20230322/“>OPEC+ reportedly likely to stick to existing deal until the end of the year</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/uk-march-cbi-trends-total-orders-20-vs-15-expected-20230322/“>UK March CBI trends total orders -20 vs -15 expected</a></li><li><a target=“_blank“ href=“https://www.forexlive.com/news/us-mba-mortgage-applications-we-17-march-30-vs-65-prior-20230322/“>US MBA mortgage applications w.e. 17 March +3.0% vs +6.5% prior</a></li></ul><p>Markets:</p><ul><li>GBP leads, JPY lags on the day</li><li>European equities slightly higher; S&amp;P 500 futures flat</li><li>US 10-year yields up 1.5 bps to 3.62%</li><li>Gold up 0.1% to $1,941.83</li><li>WTI crude down 0.3% to $69.45</li><li>Bitcoin up 0.2% to $28,190</li></ul><p style=““ class=“text-align-justify“><a target=“_blank“ href=“https://www.forexlive.com/news/welcome-to-fed-day-20230322/“ target=“_blank“ rel=“follow“>It’s all about the Fed today</a> and broader market sentiment is more pensive in general, though the overall mood is steady.</p><p style=““ class=“text-align-justify“>That comes after the risk recovery in the past two days but now markets will have to pass the Fed test to see what comes next. The banking turmoil may have subsided but the Fed could very well reignite some fears and anxiety again later before all is said and done.</p><p style=““ class=“text-align-justify“>As such, equities didn’t do a whole lot with bond yields also considerably little changed after a volatile last two weeks.</p><p style=““ class=“text-align-justify“>Instead, it was the pound who stole the focus as UK inflation surprisingly runs hot in February as food prices jump by the highest since 1977. Headline annual inflation moved back into double-digits and core inflation shot above 6%, and that helped to underpin the pound in European morning trade.</p><p style=““ class=“text-align-justify“>Coming into today, markets were just expecting one more rate hike by the BOE this week before heading to the sidelines. But after the data, another 25 bps is now priced in for May and that is now the peak for rates based on the OIS market.</p><p style=““ class=“text-align-justify“>GBP/USD moved up from 1.2230 to near 1.2300 before backing off slightly, sitting around 1.2260-80 mostly now.</p><p style=““ class=“text-align-justify“>Elsewhere, the dollar is just a touch lower against the euro and the antipodeans though the ranges for the day are leaving a lot to be desired. EUR/USD entered into the session sitting around 1.0770 but is now seen pushing towards 1.0800.</p><p style=““ class=“text-align-justify“>Now, on to the Fed next.</p>

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

<p style=““ class=“text-align-justify“>I already shared my thoughts earlier in the day <a target=“_blank“ href=“https://www.forexlive.com/news/welcome-to-fed-day-20230322/“ target=“_blank“ rel=“follow“>here</a>. And as at time of writing, Fed funds futures are reflecting roughly 86% odds of a 25 bps rate hike. It’s been a while since we last had such uncertainty heading into a FOMC meeting but here we actually are. These are the latest calls from the punters big boys ahead of the main event (h/t @ <a target=“_blank“ href=“https://twitter.com/BrianSozzi“ target=“_blank“ rel=“nofollow“>Brian Sozzi</a>):</p>

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

<p style=““ class=“text-align-justify“>That comes despite the latest slump in prices, in which we saw WTI crude break back below $70 this week. The sources reported say that OPEC+ is to stick to its deal on output cuts of 2 million bpd until year-end. For now, it looks like Russia is the only one acting to cut down on production.</p><p style=““ class=“text-align-justify“>“This is only a unilateral cut of Russia. No changes for the group until the end of year.“</p><p style=““ class=“text-align-justify“>That’s according to one of the delegates, with the other saying that no further output cuts were planned for now.</p>

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

<p>On the daily chart below, we can
see the incredibly strong and fast rally in gold that started as the Silicon
Valley Bank failed. The fears around the banking sector caused not only a
flight to safety into gold, but also a fast repricing lower in interest rates
expectations that brought down real yields and ultimately favoured the precious
metal. </p><p>As the fears faded due to the
emergency actions taken by the central banks, the buying momentum started to
weaken and led to a correction. The rally was anyway overstretched as signalled
by the distance between the price and the blue short term <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
average</a> and the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>divergence</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a>. </p><p>On the 4 hour chart below, we can
see that the break below the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> gave the sellers some control.
The moving averages crossed to the downside as the selling momentum
intensified. It may be an early signal of a change in trend, but the next
direction will be decided by the <a target=“_blank“ href=“https://www.forexlive.com/news/welcome-to-fed-day-20230322/“>FOMC
decision</a> and the economic data in the next few weeks. It’s likely that we will
see another selloff in case the Fed sounds hawkish, while a dovish outcome
would give the buyers again control. </p><p>On the 1 hour chart below, we can
see a clear setup for both buyers and sellers. The buyers will want to see the
price to break above the trendline to start piling in and extend the rally
towards new higher highs. The sellers, on the other hand, are likely to lean on
the trendline where there is <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-confluence-20220318/“>confluence</a> with a 38.2% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level and the red long period moving average. </p>

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

<ul><li>Prior +6.5%</li><li>Market index 221.0 vs 214.5 prior</li><li>Purchase index 169.3 vs 165.6 prior</li><li>Refinance index 481.3 vs 458.9 prior</li><li>30-year mortgage rate 6.48% vs 6.71% prior</li></ul><p style=““ class=“text-align-justify“>There is at least one good thing to have come from the SVB collapse and that is lower mortgage rates. The above saw its biggest fall in four months and that helped to spur mortgage activity despite the panic and financial turmoil.</p>

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

<p>On the daily chart below, we can
see that the price is sitting at a strong key <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> level at 1.3664 where we can
also find <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-confluence-20220318/“>confluence</a> with the red long period <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
average</a>. The sellers are most likely to lean on this level with defined risk if
the price breaks below it. </p><p>The strong selloff in <a target=“_blank“ href=“https://www.tradingview.com/chart/CIPuZN0R/?symbol=NYMEX%3ACL1%21″>oil
prices</a> recently, may weigh on the CAD and the possible recession should be
positive for the USD as a safe haven. Today, we will also see the <a target=“_blank“ href=“https://www.forexlive.com/EconomicCalendar“>Canadian CPI</a> and it’s likely that a miss in
the data would be negative for the CAD and a beat would keep the market in a
range ahead of the FOMC decision tomorrow.</p><p>On the 4 hour chart below, we can
see that the level at 1.3664 has also support from the 38.2% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level just below it. This will be the zone where
the buyers will lean onto in expectations of a resumption of the uptrend. The
sellers, on the other hand, will try a break below to get more conviction and
start a bigger fall. </p><p>On the 1
hour chart below, we can see that the buyers have tried several times to break
above the counter-<a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> but with no success yet. We
should see the buyers jumping in strongly once we get the breakout. The market
is focused on the FOMC decision tomorrow and we may keep seeing this choppy
price action until then. </p>

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

<p style=““ class=“text-align-justify“>The lack of any negative headlines in itself is a positive development, and that is what’s helping broader market sentiment today I would say. The banking turmoil has caused plenty of panic and worries but it looks like we are finally seeing traders and investors breathe a much needed sigh of relief.</p><p style=““ class=“text-align-justify“>2-year German bond yields are now 20 bps today to 2.52% while 2-year Treasury yields are up 15 bps to 4.07% at the moment.</p><p style=““ class=“text-align-justify“>It still doesn’t take away from the plunge that we have seen in the past week or so but it is at least a start. That indicates safety bets are starting to abate and we are seeing equities benefit as a result. Here’s a snapshot of things in Europe:</p><ul><li>Eurostoxx +1.8%</li><li>Germany DAX +1.7%</li><li>France CAC 40 +1.7%</li><li>UK FTSE +1.4%</li></ul><p style=““ class=“text-align-justify“>Meanwhile, S&amp;P 500 futures are also seen up 25 points, or 0.6%, at the moment with Dow futures also seen up 0.6% and Nasdaq futures up 0.3% on the day.</p><p style=““ class=“text-align-justify“>In FX, things are more mixed though but the Japanese yen is among the laggards as bond yields climb higher. USD/JPY is up 0.8% to 132.30 levels now with the dollar sitting more mixed – down against the euro and franc but up against the pound and antipodeans.</p>

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

<ul><li style=““ class=“text-align-justify“>Treasury, Fed, FDIC actions reduced risk of further bank failures that would have imposed losses on deposit insurance fund</li><li style=““ class=“text-align-justify“>Similar actions to protect depositors could be warranted if smaller institutions suffer deposit runs that pose risk of contagion</li><li style=““ class=“text-align-justify“>Aggregate deposit outflows from regional banks have stabilised</li><li style=““ class=“text-align-justify“>Fed is working to provide <a target=“_blank“ href=“https://www.forexlive.com/terms/l/liquidity/“ class=“terms__main-term“ id=“633aaf0b-b4a1-40c5-8fbe-bf158af520a1″ target=“_blank“>liquidity</a> to banking system, which is stabilising</li></ul><p style=““ class=“text-align-justify“>This is just a rehash of their commitment to safeguard bank deposits. For now, we might turn the page to the next chapter. But we shall see whether or not lawmakers, policymakers and regulators alike will have learned anything from this episode.</p>

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

<p>On the daily chart below, we can
see that the price has eventually break above the downward <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a>, but the buyers couldn’t extend
the rally much as the sellers are leaning on the red long period <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
average</a>. The US Dollar is under pressure as the market expects the Fed to cut
interest rates as soon as June and lead to big cuts before the end of the year.
</p><p>We also have a tentatively
positive risk sentiment as the central banks took emergency measures to calm the
markets amid the troubles in the banking sector. It’s all about the sentiment
lately and it can turn on a dime, so make sure to follow <a target=“_blank“ href=“https://www.forexlive.com“ target=“_blank“ rel=“follow“>forexlive</a> to never miss a beat. </p><p>On the 4 hour chart below, we can
see that the buyers are struggling at the 0.67 handle as the sellers are
fighting hard to defend that level. The buyers are nevertheless leaning on the
red long period moving average, but it’s likely that the next direction will be
decided by the <a target=“_blank“ href=“https://www.forexlive.com/EconomicCalendar“>FOMC
decision tomorrow</a> where the Fed is expected to deliver a dovish 25
bps hike. </p><p>In case the Fed decides to push
back against the market pricing and keep with its tightening plan, we may see
the greenback coming back strongly. </p><p>On the 1 hour chart below, we can
see that the price got stuck in a box around the 0.67 handle. For the buyers, a
break above the box would give more control and we should see a rally towards
the next <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a> at 0.6781. For the sellers, a
break below the box would give more conviction, and may lead to a fall below
the trendline to invalidate the change in trend and resume the original
downtrend. </p>

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

<ul><li>Prior -2.5%; revised to -2.3%</li></ul><p>After the slump in December, there was a notable bounce in euro area construction activity in January. Looking at the breakdown, building construction increased by 4.2% and
civil engineering by 3.0%.</p>

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