Articles
USD/CHF Price Analysis: Extends bounce off 100-HMA towards 0.9230 key hurdle
March 30, 2023 10:29 FXStreet Market News
- USD/CHF picks up bids to reverse the previous day’s pullback from weekly high.
- Convergence of one-week-old resistance line, descending trend line from early March prods Swiss Franc pair buyers.
- Bears need validation from 13-day-old ascending support line to retake control.
USD/CHF bulls are back to the table, following the previous day’s retreat, as the quote grinds higher around 0.9200 during early Thursday. In doing so, the Swiss currency pair bounces off the 100-Hour Moving Average (HMA) while also justifying the upward-sloping RSI (14) line, not overbought.
As a result, the USD/CHF buyers are likely to witness more gains. However, a convergence of an ascending trend line from the last Friday and a three-week-old descending resistance line, around 0.9230, appears a tough nut to crack for the pair buyers before retaking control.
In a case where the USD/CHF buyers manage to keep the reins past 0.9230, a run-up towards 0.9300 and the mid-month high surrounding 0.9340 can’t be ruled out. Though, a clear upside break of 0.9340 won’t hesitate to challenge the monthly peak of near 0.9440.
On the flip side, the 100-HMA level surrounding 0.9180 restricts the immediate downside of the USD/CHF price, a break of which could drag prices toward an ascending support line from March 13, close to 0.9150 at the latest.
It’s worth noting that the USD/CHF pair’s weakness past 0.9150 can make it vulnerable to testing the monthly low of around 0.9070.
Overall, USD/CHF is likely to rise further but the upside move needs validation from 0.9230.
USD/CHF: Hourly chart
Trend: Further upside expected
Full ArticleUSD/JPY Price Analysis: Bears move in and eye a significant correction towards 131.50
March 30, 2023 10:02 FXStreet Market News
- USD/JPY bears are in the market and guarding the 133 area.
- Bears will seek a move to test the prior highs and the neckline of the W-formation.
USD/JPY has moved into a phase of consolidation near 132.90 and below 133.00 the figure that has served as a key area in the prior days of March. If the bears commit, then a correction could be on the cards and given the W-formation, this is a high probability. The following illustrates such a prospect on the daily charts:
USD/JPY daily charts
USD/JPY might be expected to return to the midpoint of the W-formation in the coming days where the neckline meets a 50% mean reversion and a 61.8% Fibonacci retracement level near 131.50.
USD/JPY H1 chart
The bears need to get over the 132.50s styructure and onto the backside of the hourly micro bullish trend as illustrated baove.
Full ArticleS&P 500 Futures retreat despite Wall Street’s gains, yields seesaw as pre-Inflation anxiety escalates
March 30, 2023 09:51 FXStreet Market News
- Risk profile appears unclear as traders await key inflation clues from Europe, US.
- Key central bank officials show readiness to act while sounding less hawkish.
- Fears emanating from China, Russia and North Korea weigh on sentiment amid a light calendar in Asia.
- Second-tier US data, German HICP eyed for intraday directions.
Having witnessed a mixed end to Wednesday, market sentiment remains sluggish during early Thursday, titling towards the bears of late.
While portraying the mood, the S&P 500 Futures print mild losses around 4,050, retreating from a one-week high marked the previous day, while ignoring Wall Street’s upbeat performance. On the other hand, the US 10-year and two-year Treasury bond yields grind higher after teasing the bond buyers the previous day. That said, US 10-year and two-year Treasury yields marked their first daily loss in three on Wednesday by ending the North American trading session around 3.57% and 4.10% respectively, making rounds to the same level by the press time.
Behind the stage could be the latest comments from the officials from the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE) and Bank of Canada (BoC) gain major attention as most of them raise doubts on further rate hikes despite sounding hawkish. Also testing the market’s previous risk-on mood are the talks of easing inflation pain and geopolitical woes, not to forget anxiety ahead of this week’s key data.
Starting with Fed Chair Jerome Powell who showed forecasts for one more rate hike in 2023, which in turn pushed back talks of policy pivot and favor the US Dollar bulls. Though, Vice Chair for Supervision Michael Barr said, “We will be looking at incoming data and financial conditions to make a meeting-by-meeting judgment on rates.”
Further, Bank of England (BoE) Governor Andrew Bailey showed readiness for more rate hikes but BOE policymaker Catherine Mann flagged challenges for the UK’s central bank to do its job in the second half of the year, suggesting more hurdles for the hawks moving forward.
On the same line, BoC Deputy Governor Toni Gravelle said on Wednesday that the BOC is ready to act in the case of severe market-wide stress and provide liquidity support to the financial system.
Additionally, ECB Policymaker Isabel Schnabel said on Wednesday that underlying inflation in the Eurozone is proving sticky and hence defends the peers’ hawkish bias.
It should be observed that optimism surrounding the technology and banking sector allows the market players to remain hopeful ahead of the top-tier Europe and US inflation numbers.
Meanwhile, the nuclear threats from Russia and North Korea join the US-China tussles to also weigh on the risk profile amid a light calendar in Asia.
Looking forward, preliminary readings of the Harmonized Index of Consumer Prices (HICP) gauge for Germany and the US fourth quarter (Q4) Core Personal Consumption Expenditure (PCE) details will be important to watch for market players. However, major attention should be given to the banking and inflation clues.
Also read: Forex Today: DXY recovers despite risk appetite; focus turns to inflation data
Full ArticleEUR/GBP extends recovery above 0.8800 ahead of Eurozone Inflation and UK GDP
March 30, 2023 09:49 FXStreet Market News
- EUR/GBP has extended its recovery move above 0.8880 as the focus shifts to Eurozone inflation.
- The ECB would hike rates further if banking jitters have no or weak impact on the financial situation.
- The UK economy is expected to witness a deep recession as inflation is extremely sticky and growth is getting squeezed.
The EUR/GBP pair has stretched its recovery above 0.8800 in the Asian session. The cross has shown a gradual decline in hopes that the European Central Bank (ECB) will continue to hike rates further to tame the sticky inflation. The asset is expected to show a power-pack action ahead of the release of the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and the Gross Domestic Product (GDP) (Q4) figures on Friday.
Preliminary Eurozone HICP is expected to decelerate significantly to 7.3% from the former release of 8.5%. While core HICP is expected to escalate to 5.7% vs. the prior release of 5.6%. Weak oil prices are expected to weigh heavily on Eurozone inflation. The European Central Bank (ECB) is expected to continue tightening the monetary policy further as ECB President Christine Lagarde reiterated that Inflation will stay higher for a longer period.
Meanwhile, banking tensions are settling down as no news about further collateral damage is itself good news for the market. Chief Economist Philip Lane said on Wednesday, “ECB rates must rise if banking tension has no or ‘fairly limited’ impact.”
On the United Kingdom front, investors are keenly awaiting Gross Domestic Product (GDP) data. As per the consensus, UK’s growth has remained stagnant in the fourth quarter of CY2022. Annual GDP is expected to remain steady at 0.4%. The UK economy is expected to witness a deep recession as inflation is extremely sticky and growth is getting squeezed.
Bank of England (BoE) policymakers look confident about softening of inflation ahead and the surprise rise in February’s inflation was a one-time blip, however, an absence of evidence is still raising doubts. BoE Governor Andrew Bailey cited that more rates would be announced if inflation remains persistent further. On the contrary, analysts at Bank of America (BoA) are of the view that the BoE won’t hike rates further and will keep rates steady until 2024.
Full ArticleEthereum Shanghai Upgrade is nearing; what to expect from ETH and LSD tokens
March 30, 2023 09:35 FXStreet Market News
- Ethereum Shanghai upgrade will enable ETH withdrawals for users who staked their tokens from as early as December 2020.
- ETH selling pressure could be limited by reduced stakers, a steady withdrawal process, and 60% of the altcoin being liquid.
- LSD tokens have spiked since the announcement of the launch date, but the rally may be seasonal.
Dune analytics shows that Ethereum has over 16.3 million Ethereum staked on the network but cannot be withdrawn. The Shanghai upgrade, slated for April 12, 2023 at around 10:27:35 PM UTC will change this, allowing Ethereum stakers, including individuals and larger staking outfits to withdraw their staked ETH freely, something that is currently impossible.
The Shanghai/Capella upgrade, christened Shapella, the upgrade will enable ETH withdrawals for various users who staked their Ethereum on the network as early as December 2020. After withdrawals are enabled, experts say it will reduce the risk of holding the staked versions of Ethereum, including Lido’s stETH and Frax’s frxETH because they will finally become redeemable.
What will happen to Ethereum price post-Shapella
Investors should expect one cohort of investors to want to cash out on their staking positions for more funds, a move that will see them exit from the Beacon Chain. Even if validators withdraw and sell their digital assets, they will want to maintain their staking balance for more yields. With reduced risk, more Ethereum holders could feel motivated to stake with liquid staking derivatives (LSD) for increased yields.
The case for selling pressure
Stakers will not be able to withdraw all staked Ethereum at once. There will be a withdrawal process, with holders being able to withdraw their rewards directly. This would represent $1.03 million ETH, equivalent to $1.8 billion at current rates. Given that Ethereum’s daily volume ranges between US $8-10 billion, chances of negligible selling pressure are high.
Moreover, considering the amount staked per validator cannot be withdrawn directly because of the 50,400 ETH per day limit ($85M at current rates), this is a negligible amount compared to the token’s daily volume. Chances are very high, therefore, that the price will not be too impacted given the low seller pressure that is also diluted.
The case for buying pressure
As regards buying pressure, given that staking rewards are inversely proportional to the number of validators, if the number of validators reduces, presumably because of validators withdrawing their ETH, rewards will surge and attract other validators. Given ETH is now deflationary, however, we expect more buying pressure compared to selling pressure.
If Ethereum holders refrain from selling their tokens and instead buy and hold indefinitely, the equilibrium Ethereum price could rise because the quantity supplied will reduce.
Buying pressure could therefore increase due to validators existing, which will cause rewards to increase thereby drawing in more investors. Secondly, incumbent stakers are expected to show more optimism, and finally, the idea that ETH is now deflationary will inspire buyers.
Liquid staking derivatives pumping before the Shanghai upgrade
Following the latest announcement from the Ethereum Foundation, Liquid staking derivatives like Lido DAO, Frax Shares, and Rocket Pool have spiked. These LSDs were designed to make staking easier as they do not require a minimum deposit to become a staker. The gains for the native tokens of these staking projects, LDO, FXS, and RPL, respectively, outperformed Ethereum price that surged 5.5% in the last 24 hours. LDO surged 18.6%, RPL 13.3%, and the FXS 20.4%, based on data on Coingecko.
The surge pre-upgrade comes as Shapella will help bypass high-entry barriers such as the 32 ETH threshold, need for technical node-operating knowledge, and withdrawal queue. After April 12, users will be able to stake easily through LSDs which could lead to a boost in total value locked (TVL), on-chain activities, and ultimately valuation of these protocols.
ETH/USDT 1-day chart, FXS/USDT 1-day chart, LDO/USDT 1-day chart, RPL/USDT 1-day chart
Notably, the above protocols allow users to deposit whichever amount of Ethereum and stake. When you deposit directly on the mainnet, you need a minimum of 32 ETH to participate. Depositing into a staking project earns you a “staked” version of ETH (stETH), which accrues staking yield and surges as a receipt of their deposit.
Possible impact of Shapella on LSDs
LSD protocols not only unlock the value of staked tokens but also gives users the opportunity to earn staking rewards. They also use the derived value of their staked tokens on other protocols. Conversely, being able to unstake your tokens post-Shapella makes the validator lose out on the staking rewards. This means that LSDs will remain relevant.
Also, with the news of regulating centralized exchanges (CEXs) and restricting them from staking, after the Shanghai upgrade, we might notice a huge withdrawal of coinbase ETH. However, it remains to be seen whether these users will move to another LSD protocol or if they will sell off.
Moving to Lidomay threaten Ethereum protocol due to centralization risks. For the meantime, investors should expect a more positive run for Ethereum-based LSDs as the Shanghai upgrade builds confidence in users that they can unstake their ETH whenever they want.
Full ArticleUSD/CNY fix: 6.8886 vs. the previous fix of 6.8771
March 30, 2023 09:33 FXStreet Market News
In recent trade today, the People’s Bank of China (PBOC) set the yuan at 6.8886 vs. the previous fix of 6.8771 and the prior close at 6.8866.
About the fix
China maintains strict control of the yuan’s rate on the mainland.
The onshore yuan (CNY) differs from the offshore one (CNH) in trading restrictions, this last one is not as tightly controlled.
Each morning, the People’s Bank of China (PBOC) sets a so-called daily midpoint fix, based on the yuan’s previous day’s closing level and quotations taken from the inter-bank dealer.
Full ArticleEUR/JPY drops from above 144.00 ahead of German/Tokyo Inflation
March 30, 2023 09:33 FXStreet Market News
- EUR/JPY has corrected marginally from above 144.00, however, the upside bias seems solid.
- ECB Kazimir believes “There is a genuine danger that banks will cut back on lending.”
- Declining international oil prices have weighed heavily on Tokyo’s inflation.
The EUR/JPY pair has sensed selling pressure after failing to sustain above the critical resistance of 144.00 in the Asian session. The cross is expected to turn sideways ahead of the release of the inflation figures by Germany and Tokyo. The asset is aiming higher for the past four trading sessions amid receding expectations of an exit from the ultra-loose monetary policy by the Bank of Japan (BoJ).
Investors are shifting their focus toward the release of the preliminary German Harmonized Index of Consumer Prices (HICP) data. As per the consensus, monthly German HICP is expected to expand by 0.8% vs. the former release of 1.0%. On an annual basis, German HICP would soften dramatically to 7.5% from the prior release of 9.3%.
It seems that the continuation of the policy-tightening spell by the European Central Bank (ECB) is showing its impact on inflationary pressures. ECB policymaker Peter Kazimir cited on Wednesday “I think inflation is too high for too long.” He further added that the ECB will consider the financial situation before arriving at the interest rate decision. ECB Kazimir believes “There is a genuine danger that banks will cut back on lending.”
About interest rate guidance, ECB Kazimir is of the view, “We should continue in raising rates, possibly at a slower pace.”
On the Japanese Yen front, declining international oil prices have weighed heavily on Japan’s inflation. The street is anticipating further softening of the headline Tokyo CPI to 2.7% from the former release of 3.4%. While the core CPI that excludes oil and food prices is seen expanding to 3.3% from the former release of 3.2%.
Full ArticleUSD/CAD Price Analysis: Bears run into support but eye a continuation towards 1.3450
March 30, 2023 09:29 FXStreet Market News
- USD/CAD bulls eye a move towards neckline resistance.
- Bears seek a continuation and break of support to open 1.3450.
The Canadian Dollar strengthened to its highest level in nearly four weeks against the Greenback on Wednesday as a recovery in risk appetite supported the currency. However, there are prospects of a correction at this juncture as the following technical analysis illustrates.
USD/CAD weekly chart
As seen, USD/CAD is meeting a support area and leaving behind an M-formation which is a reversion pattern and would be expected to see the price return to the neckline for a retest in due course. The ultimate objective is a retest of the trendline support that meets horizontal support near 1.3250 in the long term.
USD/CAD daily chart
This would see the daily chart´s price action correct up and into the Fibonacci scale. The 38.2% Fibonacci aligns with the nose of the neckline near 1.3650. However, should the beares move in again, then the focus will be on 1.3450 in the medium term.
Full ArticleGBP/USD drops back to 1.2300 even as BoE, Fed talks appear less hawkish
March 30, 2023 09:29 FXStreet Market News
- GBP/USD extends the previous day’s pullback from two-month high, stays pressured near intraday low of late.
- Easing supply-chain hurdles in the UK, comments from BoE’s Mann challenge hawkish bias of Governor Andrew Bailey.
- US Dollar grinds higher even as Fed policymakers highlight data dependency, slower rate hikes.
- Inflation woes, banking news will be crucial for fresh impulse amid a light calendar.
GBP/USD renews intraday low near 1.2295 as it stretches the previous day’s U-turn from the highest levels since early February. The Cable pair’s latest pullback could be linked to the chatters suggesting hardships for the Bank of England (BoE) hawks, as well as the US Dollar’s sustained rebound, amid a sluggish Asian session on Thursday.
Reuters quotes the UK’s 13.1% jump in car production during February to mark the easing in the supply-chain woes, which in turn challenges the Bank of England (BoE) Governor Andrew Bailey’s previously hawkish statements. Additionally, BOE policymaker Catherine Mann flagged challenges for the UK’s central bank to do its job in the second half of the year, suggesting more hurdles for the hawks moving forward.
It should be noted that UK Finance Minister Jeremy Hunt’s comments saying, “Core inflation will be harder to bring down,” joined the BoE Governor Bailey’s readiness for more rate hikes, if needed, to put a floor under the Cable price.
On the other hand, the US Dollar Index (DXY) marked the first daily gain in three the previous day, up 0.09% intraday near 102.75 by the press time. A retreat in the US Treasury bond yields joined the quarter-end positioning and cautious optimism in the market to underpin the US Dollar’s latest rebound. Adding strength to the greenback’s rebound could be the geopolitical fears emanating from China, Russia and North Korea. However, an absence of hawkish comments from the Federal Reserve (Fed) officials joins the absence of talks about banking woes to weigh on the US Dollar.
That said, Bloomberg came out with the news suggesting Fed Chair Jerome Powell showed forecasts for one more rate hike in 2023, which in turn pushed back talks of policy pivot and favor the US Dollar bulls. Though, Vice Chair for Supervision Michael Barr said, “We will be looking at incoming data and financial conditions to make a meeting-by-meeting judgment on rates.”
Elsewhere, optimism surrounding the technology and banking sector allows the GBP/USD to fight back the bears.
Against this backdrop, US 10-year and two-year Treasury yields marked their first daily loss in three on Wednesday by ending the North American trading session around 3.57% and 4.10% respectively, making rounds to the same level by the press time. It should be observed that the S&P 500 Futures struggle to extend Wall Street’s gains at the latest.
Moving on, a light calendar in the UK suggests the GBP/USD pair traders watch for risk catalysts and the US factors for clear directions. As a result, the final readings of the US fourth quarter (Q4) Gross Domestic Product (GDP) will join the Q4 Core Personal Consumption Expenditure (PCE) details and the weekly jobless claims will be important to track.
Also read: US February PCE Inflation Preview: Bad news for the Dollar, good news for the Fed?
Technical analysis
A two-week-old rising wedge bearish chart formation lures GBP/USD sellers between 1.2430 and 1.2290 at the latest.
Full ArticleAUD/USD Price Analysis: Downside looks solid amid H&S formation
March 30, 2023 09:05 FXStreet Market News
- AUD/USD is juggling in a restricted territory around 0.6680 after Australian Inflation-inspired volatility.
- A consecutive deceleration in Australian CPI has strengthened hopes for a pause in the rate-hiking spell by the RBA.
- The Aussie asset has dropped below the 50-period EMA, which indicates that the short-term trend has turned bearish.
The AUD/USD pair is showing topsy-turvy action in a narrow range around 0.6680 in the Asian session. The Aussie asset remained in action on Wednesday after the monthly Australian Consumer Price Index (CPI) softens further to 6.8% from the former release of 7.4% and its peak of 8.4% recorded in December.
A consecutive deceleration in Australian inflation has strengthened hopes for a pause in the rate-hiking spell by the Reserve Bank of Australia (RBA). However, economists at ANZ Bank are of the view that “While the RBA has signaled its intention to pause at some point in coming months, we continue to think that the data is not yet consistent with a pause.”
Meanwhile, S&P500 futures are showing nominal losses after a super bullish Wednesday, portraying mild pessimism in the overall positive market mood. The US Dollar Index (DXY) is looking to resume its upside move after sensing a cushion around 102.60.
On an hourly scale, AUD/USD is forming a Head and Shoulder chart pattern, which indicates a prolonged consolidation. A breakdown of the aforementioned chart pattern results in a bearish reversal. The neckline of the chart pattern is plotted from March 29 low at 0.6661.
The asset has dropped below the 50-period Exponential Moving Average (EMA) at 0.6682, which indicates that the short-term trend has turned bearish.
Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range. A break into the bearish range of 20.00-40.00 will trigger the downside momentum.
A slippage below March 29 low at 0.6661 will drag the asset toward March 24 low at 0.6625 and the March 15 low at 0.6564.
Should the asset breaks above March 13 high at 0.6717, Aussie bulls would drive the asset further toward March 07 high at 0.67478 followed by the horizontal resistance plotted from February 23 low at 0.6781.
AUD/USD hourly chart
GBP/JPY traces yields to retreat towards 163.00 amid challenges for BoE hawks
March 30, 2023 09:05 FXStreet Market News
- GBP/JPY pares the biggest daily gains in six weeks, reverses from a fortnight high.
- Talks of tough pension regulations, easing supply chain hurdles prod BoE’s hawkish bias.
- BoJ officials’ defense of easy-money policies contrasts with likely run-up in inflation.
- Japanese wage accords, stable economic outlook advocate BoJ’s exit from ultra-loose policies.
GBP/JPY drops back towards 163.00, down 0.30% intraday near 163.10 during early Thursday, as it reverses from a two-week high amid mixed sentiment and a sluggish session. In doing so, the cross-currency pair traces downbeat Treasury bond yields while also justifying the receding inflation fears in the UK, as well as the challenges for the Bank of Japan (BoJ) officials’ defense of the easy money policy.
US 10-year and two-year Treasury yields marked their first daily loss in three on Wednesday by ending the North American trading session around 3.57% and 4.10% respectively, making rounds to the same level by the press time.
Elsewhere, Reuters quotes the UK’s 13.1% jump in car production during February to mark the easing in the supply-chain woes, which in turn challenges the Bank of England (BoE) Governor Andrew Bailey’s previously hawkish statements. Additionally, BOE policymaker Catherine Mann flagged challenges for the UK’s central bank to do its job in the second half of the year, which in turn hints at likely hurdles for the hawks.
On a different page, the BoJ policymakers, including the outgoing Governor Haruhiko Kuroda, advocates for an easy money policy but the latest wage accord and Prime Minister Fumio Kishida’s readiness for higher wages can challenge the ultra-loose policies. Recently, global rating agency Fitch Ratings affirmed Japan’s sovereign credit rating at ‘A’ while maintaining a ‘stable’ outlook. “Base case remains that BoJ will maintain its loose monetary policy over the medium term,” said Fitch.
It’s worth mentioning that the nuclear threats from Russia and North Korea join the US-China tussles to also weigh on the GBP/JPY prices. Even so, optimism on technology and banking fronts keeps the S&P 500 Futures firmer.
Moving on, a light calendar can allow the cross-currency pair to extend the latest pullback.
Technical analysis
A clear upside break of one-month-old descending trend line, now immediate support around 162.30, directs GBP/JPY buyers towards the monthly high of 164.25.
Full ArticleSilver Price Analysis: Wednesday’s Doji prods XAG/USD bulls below $23.50 hurdle
March 30, 2023 09:02 FXStreet Market News
- Silver price retreats after positing bearish candlestick the previous day.
- Overbought RSI conditions, repeated failures to cross three-month-old resistance line also tease XAG/USD bears.
- 10-DMA restricts immediate downside; $24.00 acts as an extra filter towards the north.
Silver price (XAG/USD) slides to $23.30 while printing mild losses during Thursday’s sluggish Asian session.
In doing so, the bright metal justifies the previous day’s Doji candlestick, as well as overbought conditions of the RSI (14) line, to push back the bullish bias below a downward-sloping resistance line from early January 2023. Additionally, keeping the XAG/USD sellers hopeful is the receding strength of the MACD’s bullish bias.
However, the 10-DMA support of $23.00 restricts the immediate downside of the Silver price, a break of which could quickly drag the quote towards the 61.8% Fibonacci retracement level of its February-march fall, near $22.80.
In a case where the XAG/USD remains bearish past $22.80, the 50% and 38.2% Fibonacci retracement levels, around $22.25 and $21.70 in that order, could test the Silver sellers before directing them to the early March high of $21.30.
On the contrary, a daily closing beyond the three-month-old descending resistance line, around $23.50 by the press time, becomes necessary for the Silver buyers to defy the downbeat signals flashed through the previous day’s Doji and retake control.
Even so, the multiple resistances near $24.00 can test the XAG/USD buyers ahead of highlighting the yearly top surrounding $24.65.
Overall, Silver price is likely to witness a pullback but the downside room appears limited.
Silver price: Daily chart
Trend: Pullback expected
Full Article