Lifelines given to Credit Suisse and First Republic Bank have soothed a risk-off public in the face of a banking crisis

Equity markets advanced and the dollar index eased as markets relaxed from the looming banking crisis on news of bailouts. A $54 billion lifeline thrown to Credit Suisse by the Swiss Central bank in order to solve the bank’s liquidity issues. Meanwhile, major banks in the U.S. injected $30 billion in deposits into First Republic bank to rescue the bank from collapse, unwinding the tension in the market. On the other hand, the ECB, bearing all pressures, announced a 50 bps rate hike yesterday amid recent turmoil in the banking sector. However, the chair of the ECB did not provide indication for future monetary policy decisions amid uncertainty in the financial sector. In addition, oil prices are still struggling below $70 since the banking crisis emerged, with future direction hinging on the meeting between Russian and Saudi Arabian delegates to discuss further oil supply cuts.

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Look Out For

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

25 bps (7.7%) VS 50 bps (92.3%)

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Market Overview

Economic Calendar

Market Movements

DXY

Global risk sentiment received a much-needed boost as Credit Suisse, one of Switzerland’s top banks, secured a lifeline from the Swiss National Bank. Credit Suisse borrowed up to a staggering $54 billion to shore up liquidity, bringing relative calm to the banking sector after days of turmoil. In addition, the giants of the US banking sector have agreed to prop up the ailing First Republic Bank, a mid-sized bank that has been pummelled amid a wider banking turmoil. The reassuring moves had stoked a shift in sentiment toward other riskier assets, dragging down the appeal for the safe-haven Dollar.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated diminishing bullish momentum, while RSI is at 52, suggesting the index might trade lower since the RSI retreated sharply from the overbought territory.

Resistance level: 104.90, 105.80

Support level: 104.15, 103.45

XAU/USD

After the improved global risk sentiment after Credit Suisse’s recent liquidity-boosting move, gold prices lost their glitter. As investors’ confidence returned, gold prices retreated slightly, with the precious metal shedding its safe-haven status in the face of resurgent investor appetite for riskier assets. The joint statement from major US banks reaffirming their confidence in the banking system lifted market sentiment, leading investors to liquidate their holdings in the yellow metal.

Gold prices are trading flat while currently testing the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 64, suggesting the commodity might trade lower since the RSI retreated sharply from the oversold territory.  

Resistance level: 1930.00, 1955.00

Support level: 1900.00, 1860.00

EUR/USD 

The Euro surged against the US Dollar on Thursday as the European Central Bank (ECB) raised its key interest rates by 50 basis points, underlining its unwavering commitment to curbing the mounting inflation rate. The ECB’s main refinancing operations interest rate will now stand at 3.50%, while the deposit facility rate and the marginal lending rate will increase to 3.0% and 3.75%, respectively. The ECB emphasised that it remains steadfast in its fight against persistently high inflation, which it expects to persist for some time. Additionally, the bank raised its growth forecast, predicting a 1% GDP growth rate for this year. Despite the recent banking crisis, the ECB revised its forecast for 2024 and 2025.

EURUSD is trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 49, suggesting the pair to extend its gains toward resistance level. 

Resistance level: 1.0685, 1.0790

Support level: 1.0540, 1.0460

BTC/USD

BTC prices are much encouraged by the improved condition in the financial market, where risk-on sentiment is increasing. BTC advanced by nearly 700 and broke its strong resistance level at $25200 yesterday as concern over bank collapse across Euro and the U.S. diminished. Swiss National Bank stepping in to bailout Credit Suisse and major bank deposits into the First Republic Bank ease the tension in the market. The Fed is going to announce its interest rate decision and the market is uncertain about the Fed’s tendency in the size of the rate hike after the banking sector roiled the market. A smaller rate hike definitely will spur BTC prices higher. 

The indicators show BTC has a strong bullish momentum with the RSI moving upward and breaking above the 70-level while the MACD is gaining above the zero line. 

Resistance level: 27140, 28607

Support level: 24000,  22466

NASDAQ 

The Nasdaq index rose 2.48% to 11,717 points on Thursday as market sentiment improved after the U.S. banks agreed to inject a historic amount of deposits into the First Republic Bank with $30 billion, easing the banking crisis recently. Banks in the U.S. are looking out for one another, helping to boost investors’ confidence. Therefore, investors might shift their risk appetite to the risky asset, contributing to the gains of the Nasdaq index. Markets are now focusing on next week’s Federal Reserve rate hike decision. Most traders are pricing in a 25 basis point hike from the Fed, though there is a 20% chance of the Fed pausing instead. 

As we can see, the index has strongly rebounded these days. If the Federal Reserve keeps the rate unchanged, it might significantly boost the index to break the next resistance level of 12808 points. MACD has illustrated a neutral-bullish momentum ahead. RSI is at 65, indicating a bullish momentum in the near term. 

Resistance level: 12808, 13778

Support level: 11997, 11445

GBP/USD 

As market sentiment changed, the pound rose 0.46% to $1.2134 against the dollar on Thursday. Traders’ expectations on the Federal Reserve rate hike path become lower, and they expect the Fed to keep the rate unchanged, prompting the dollar to drop and the pound to rise. However, market sentiment improved after the U.S. banks agreed to inject a historic amount of deposits into the First Republic Bank with $30 billion, easing the banking crisis recently. Most investors are focused on next week’s Federal Reserve rate hike decision for further trading signals. 

The pound has rebounded after it touched the support level of 1.2044 and was trading at 1.2134 as of writing. It indicates the overall sentiment for the pound remains bullish. MACD has illustrated a neutral-bullish momentum in the short term. RSI is at 58, indicating a bullish momentum ahead. 

Resistance level: 1.2211, 1.2300

Support level: 1.2126, 1.2044

Dow Jones

The Dow has rebounded from its support line and the indicators signal for a reversal for the index. The RSI bounced before falling into the oversold zone while the MACD and the signal lines crossed below the zero line. 

The Dow closed higher by 371.9 points or 1.1% with optimism over the banking crisis resolution. Besides, Credit Suisse announced it would borrow up to nearly $54 billion from the Swiss National Bank which boosted market confidence; the market is further beefed up by the news that major banks deposit up to $30 billion to rescue the First Republic Bank from collapse. Meanwhile, investors are digesting the move from the ECB with a rate hike of 50 bps; the market is uncertain whether the Federal Reserve will follow the footstep of the ECB to introduce a bigger rate hike amid banking turmoil reverberating. If the Fed announces a rate hike lower than 50 bps next week will definitely spur the equity market. 

Resistance level: 32448.00, 33265.00

Support level: 31147.00, 29993.00

CL OIL

Oil prices rebounded on Thursday, ending a three-session losing streak, as reports emerged that Saudi Arabia and Russia had held talks to enhance market stability. According to Saudi state media, the country’s energy minister, Prince Abdulaziz bin Salman, and Russian deputy prime minister, Alexander Novak, discussed the OPEC+ group’s efforts to maintain market balance during their meeting in the Saudi capital. Both nations have pledged to uphold OPEC’s decision to cut production targets by two million barrels per day until the end of 2023.

Oil prices are trading higher following the prior rebound from the support level. MACD has illustrated diminishing bearish momentum, while RSI is at 37, suggesting the commodity to extend its gains toward resistance level.  

Resistance level: 70.35, 73.90

Support level: 65.85, 61.70