Markets have turned risk-off as the fallout from SVB’s collapse continues, with gold trading above $1900 for the first time in a month.

The fallout of Silicon Valley Bank continues to reverberate across financial markets around the globe despite the U.S. government announcing measures to stem systemic risks further and uphold market confidence. The equity market remains muted in this uncertain period while investors increasingly turn to safe-haven assets, sending gold prices to trade above $1900 for the 1st time in a month. CPI data released today is crucial for the Fed, where high reading will put the Fed in a difficult position whether to raise rates amid financial instability. On the other hand, Australia’s business confidence data slipped into negative territory, increasing the possibility that the RBA may consider pausing its tightening program. In addition, oil prices were hit by the U.S. banking crisis and dropped by more than 8% in the past 5 sessions despite OPEC and IEA being optimistic about the oil demand outlook. 

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Look Out For

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

25 bps (23.2%) VS 50 bps (76.8%) 

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Market Overview

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Economic Calendar

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Market Movements

DXY

The collapse of Silicon Valley Bank and Signature Bank has sent shockwaves through the financial industry, causing investors to dramatically revise their expectations for the Federal Reserve’s upcoming interest rate decision. As a result, many have flocked to the safety of government debt, driving bond prices higher and pushing two-year treasury yields to their biggest one-day drop since the global financial crisis of 2008. This market turbulence has also significantly impacted the US dollar, which has weakened in response to the lower US Treasury yields.

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated increasing bullish momentum, while RSI is at 41, suggesting the index to be traded higher in short-term as technical correction.      

Resistance level: 104.15, 105.10

Support level: 103.65, 102.85

XAU/USD

As investors sought safer havens amid the market turbulence, gold and silver prices rallied, reflecting heightened demand for these precious metals. Markets will continue fraught with uncertainty and volatility, making it more important than ever for investors to exercise caution and take a long-term view of their portfolios. Ultimately, the ability of regulators and market participants to navigate these challenges will determine the path of the global economy in the coming months and years.

Gold prices are trading higher following the prior breakout above the previous resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 89, suggesting the commodity might enter the overbought territory.  

 Resistance level: 1925.00, 1955.00

Support level: 1990.00, 1885.00

EUR/USD 

The euro’s bullish run stopped after the dollar rebounded from its monthly low and rebounded slightly. The shutdown of Silicon Valley Bank (SVB) continues to reverberate, which hammered the dollar as higher expectation that the Fed may not introduce higher rate amid the U.S. banking crisis. Investors also being cautious the spillover effect may spread to the Eurozone, where there are SVB stakeholders in the economic bloc. Investors are now focusing on the U.S. inflation data which was released today although the expectation of a 50 bps rate hike has slashed down in the backdrop of financial market uncertainty. 

On the technical front, the euro’s bullish momentum eased as the RSI failed to break above the overbought zone while the MACD is still moving in an uptrend manner. 

Resistance level: 1.0797 1.0867

Support level: 1.0613, 1.0540

BTC/USD

BTC rallied gaining over 9% yesterday with the investors’ confidence being reinstalled. The U.S. treasury announces measures and also guarantees the government will insure all deposit money. Although both SVB and Silvergate are seen as crypto-friendly bank collapse, the step-in by the government regains investors’ confidence and is reflected in BTC prices. The dollar toppled after the banking crisis emerged with the dollar index traded to its monthly low to help buoy BTC prices. Investors are eyeing on the  U.S. inflation data that is set to release today despite the market expecting a modest rate hike from the Fed amid financial market uncertainty. 

The indicators show BTC is trading with a strong bullish trend with the RSI constantly surging above the overbought zone while the MACD is diverging above the zero line. 

Resistance level: 24967, 26248

Support level: 23713,  22816

USD/JPY

The yen was last up 0.33% to 133.72 per dollar, as the Fed rate hike outlook tumbled after the SVB collapse. The U.S. dollar weakened on Monday as traders bet the Federal Reserve will slow, if not halt its raising of interest rates to curb inflation after U.S. authorities moved to limit the fallout from the sudden collapse of Silicon Valley Bank. Traders will soon focus on the U.S. consumer price index report, which could drive further bets on the Fed’s next move. 

The pair touched its support level of 132.87 and rebounded to 133.72 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 37, a slight correction after it touched its oversold zone, indicating a bearish momentum ahead. 

Resistance level: 134.82, 137.19

Support level: 132.87, 129.89

GBP/USD 

The pound has extended its gain by 0.43% to $1.2151 on Monday as markets rethink the Fed’s rate hike path after SVB collapse. The sudden collapse of U.S. tech-focused lender Silicon Valley Bank (SVB) increased expectations that the Federal Reserve will slow down the pace of its interest rate hikes. Therefore, drag down the U.S. dollar, driving up the pound. Moreover, the U.S. government announced several emergency measures to advocate confidence in the banking system. In Britain, HSBC (HSBC.L) bought the U.K. arm of SVB on Monday. U.K. finance minister Jeremy Hunt said the rescue was necessary to help protect some of Britain’s most important technology companies. Meanwhile, pound traders await the upcoming U.K. labour market data for further trading signals. 

The pound continues its strong rally and breaks the third resistance level this week to $1.2151 as of writing. MACD has illustrated an increasing bullish momentum ahead. RSI is at 68 and trading near the 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 has suffered yet another blow, as concerns surrounding the repercussions of Silicon Valley Bank’s collapse continue to weigh heavily on the markets. Despite regulatory measures implemented to combat the situation, risk aversion remains prevalent among investors, with contagion fears exacerbating the already fragile state of the market. This sentiment is reflected in the CBOE Volatility Index, commonly known as Wall Street’s “fear gauge,” which surged by 1.72 points, reaching a peak of 26.52. Analysts attribute this spike to the mounting anxiety surrounding the fallout from Silicon Valley Bank’s collapse and its potential impact on the broader financial system. 

The Dow is trading lower following the prior breakout below the previous support level. MACD has illustrated increasing bearish momentum. However, RSI is at 28, suggesting the index is entering oversold territory. 

Resistance level: 32530.00, 34310.00

Support level: 30945.00, 28760.00

CL OIL

Oil prices experienced a tumultuous day of trading on Monday, with a sharp decline in response to the collapse of Silicon Valley Bank (SVB), sparking concerns of potential recessionary impacts. However, the losses were eventually curtailed by a rebound in demand from China, providing some respite for the beleaguered commodity. The abrupt shuttering of SVB Financial set off alarm bells while amplifying anxieties around the fragility of the banking sector. Despite this, the dollar index suffered a significant setback, plunging almost 1% as short-term treasury yields hit new lows. A weakened greenback typically renders oil more affordable for non-dollar holders.

Oil prices are trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 40, suggesting the commodity might experience technical correction since the RSI rebounded sharply from the oversold territory.        

Resistance level: 80.55, 86.50

Support level: 73.10, 65.70