Stock markets tumbled and the dollar weakened last Friday even as the NFP reading exceeded the market consensus. A banking crisis is looming in the U.S. as another crypto-friendly bank has collapsed following Silvergate and SVB. New York state regulators have closed Signature Bank, where the closure of its real-time payment service for crypto clients will cause liquidity issues for the crypto market. Uncertainty in the financial market bolstered the demand for the safe-haven gold, causing prices to surge for 3 consecutive sessions totalling more than 4%. Meanwhile, the dollar index turned bearish as the market perceived a 50 bps is less likely as financial risk emerged with multiple U.S. banks collapsed in a short period. Notwithstanding the fact that another crypto-friendly bank has collapsed, U.S. regulators are stepping in with a rescue plan, pledging to protect all depositors’ money and boosting crypto investors’ confidence and spurring BTC prices to jump over 10% on Monday. 

---

Look Out For

Current rate hike bets on 22nd March Fed interest rate decision: 

25 bps (4%) VS 50 bps (96%) 

---

Market Overview

Economic Calendar

Market Movements

DXY

The US Dollar dipped after the mixed economic data were released. The US economy witnessed a robust addition of jobs in February, as the Bureau of Labor Statistics reported Nonfarm Payrolls of 311K, outstripping market expectations of 205K. Despite this, the sluggish wage growth and high unemployment rate point towards an easing of inflationary pressures. As a result, the Federal Reserve may be inclined to slow down its rate hike path. While the US unemployment rate and Average Hourly Earnings (MoM) both fared worse than anticipated at 3.6% and 0.2%, respectively, the lack of acceleration in wage growth suggests a potential slowdown in economic activity. This, coupled with concerns about the economic cost of the tightening cycle, has caused investors to reassess their bond buying activity, leading to a heavy fall in US government bond yields.

The Dollar Index is trading lower while currently testing the support level. MACD has illustrated bearish momentum, while RSI is at 33, suggesting the index might extend its losses after breakout since the RSI stays below the midline.     

Resistance level: 105.10, 105.80

Support level: 104.15, 103.65

XAU/USD

The collapse of Silicon Valley Bank, the largest failure of a US bank since the 2008 financial crisis, has sent shockwaves through the financial world, causing uncertainty and instability among investors. As a result, gold prices have been on the rise as investors allocate their portfolio into safe-haven asset.

Gold prices are trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 83, suggesting the commodity is entering overbought territory.

Resistance level: 1885.00, 1900.00

Support level: 1865.00, 1845.00

EUR/USD 

The U.S. NFP reading came higher-than-expected at 311 thousand exceeding market consensus, but it dropped significantly as compared to the previous reading of 504 thousand. A sign of cooling in the labour market weakened the dollar as the market perceived the Fed raising the rate by 50 bps in March has a lower probability. The emerging financial market crisis in the U.S. as the 3rd bank in the country collapsed in this year gave the Fed a question mark on whether to introduce a jumbo interest rate hike to the market amid financial strains. The pair is expected to be more volatile as the U.S. CPI data will be released on Tuesday (13th March) and the Eurozone interest rate decision will be announced on Thursday (16th March) with the market consensus of a 50 bps rate hike. 

On the technical front, the euro gained for 3 consecutive sessions by nearly 2% as various factors hindered the dollar. The RSI broke into the overbought zone while the MACD broke above the zero line, both indicators gave a bullish signal for the pair. 

Resistance level: 1.0797 1.0867

Support level: 1.0613, 1.0540

BTC/USD

BTC rebounded significantly by more than 10% as BTC prices slumped after multiple crypto-friendly banks collapsed in this period. Silvergate and SVB closing down has hammered BTC prices to below $20,000 as closing in their real-time payment service for the digital assets market with crypto clients to transact 24 hours a day and 7 days a week may cause liquidity issues in the crypto market. However, U.S. regulators have stepped into the market to safeguard the country’s financial system by pledging to fully protect all depositors’ money which bolsters crypto investors’ confidence. On the other hand, a drop in NFP reading as compared to the previous reading has eased the pressure of BTC prices from the strengthened dollar. 

The RSI is breaking into the overbought zone, suggesting a strong buying power while the MACD has diverged and broken above the zero line simultaneously. 

Resistance level: 22817, 23713

Support level: 21540,  20623

USD/JPY

The yen was last up 2.09% to 133.89 after the Bank of Japan maintained its ultra-low interest rates on Friday and held off making changes to its yield curve control policy, leaving options open ahead of a leadership transition in April. BoJ maintained its short-term interest rate target at -0.1% and that for the 10-year bond yield around 0%. It also left unchanged a band set around the 10-year yield target that allows the yield to fall or rise up to 0.5%. Secondly, the yen rose against the weakened dollar due to mixed U.S. job data dragging down the dollar index. Data showed robust job growth but an increase in the unemployment rate and signs of cooling wage inflation. It added 311K payrolls in February, and the unemployment rate rose to 3.6%. Therefore, investors might shift their bets on the Fed’s rate, triggering the fluctuation of the U.S. dollar. 

The pair successfully crossed the support level and traded at 133.89 as of writing. In the short term, we expect the pair to trade within the range of 132.87 to 134.82. MACD has illustrated a diminishing bullish momentum. RSI is at 29, touching its oversold zone, it might have a slight technical rebound in the near term. 

Resistance level: 134.82, 137.19

Support level: 132.87, 129.89

GBP/USD 

The pound rose 1.41% to $1.2093 against the dollar on Friday as  GDP data increased to 0.3% in January, further allaying fears of a recession, while mixed U.S. job data weakened the dollar. In addition, the dollar weakened broadly after Friday’s U.S. labour market, which showed robust job growth but an increase in the unemployment rate and signs of cooling wage inflation. It added 311K payrolls in February, and the unemployment rate rose to 3.6%. Market participants shifted their bets that the Fed will raise interest rates as sharply or as high as earlier, following Friday’s jobs data. Investors can keep an eye on upcoming U.K. employment data due on Tuesday for further trading signals. 

The pound continues its strong rally and breaks two resistance levels in a row to 1.2136 as of writing. MACD has illustrated an increasing bullish momentum ahead. RSI is at 74 and touches its overbought zone, indicating the pair might have a slight retracement soon. 

Resistance level: 1.2211, 1.2300

Support level: 1.2126, 1.2044

Dow Jones

The Dow Jones Industrial Average experienced a significant decline, succumbing to risk-averse market sentiment that has been roiling the global financial landscape. This downturn comes on the heels of the recent upheaval in the banking industry, triggered by the shocking collapse of Silicon Valley Bank. The sudden demise of this once-prominent financial institution has left many of its high-powered clients and investors in a state of uncertainty.

The Dow is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum. However, RSI is at 29, suggesting the index is entering oversold territory. 

Resistance level: 32530.00, 34310.00

Support level: 30945, 28760

CL OIL

Oil prices surged on Friday, buoyed by a weakening US Dollar in the wake of lower-than-expected wage growth, which reduced the likelihood of an aggressive rate hike from the Federal Reserve. On the supply front, a decrease in US oil rigs is also contributing to the upward trend. According to data from Baker Hughes, the number of oil rigs in the US fell by 2 to 590 this week, marking the lowest level since June. Investors are currently keeping a close eye on the export cuts being implemented by Russia, which has decided to trim its oil output by 500,000 barrels per day in March. The move is part of a broader effort by Russia and its allies to curb global oil supply to support prices.

Oil prices are trading higher following the prior breakout above the previous resistance level. MACD has illustrated increasing bullish momentum, while RSI is at 51, suggesting the commodity might extend its gains since the RSI stays above the midline.       

Resistance level: 78.40, 80.55

Support level: 76.50, 75.10