Daily Forex market analysis - graphical, wave and technical analysis online

The euro was covered by panic

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The market sells first, and then it is sorted out. The sharp collapse of EUR USD was the result of the implementation of this principle. Deutsche Bank's announcement about the early repayment of previously issued syndicated bonds caused another wave of panic in the financial markets. The bank's shares collapsed by 15%, showing the worst dynamics since the recession of 2020, and the euro collapsed against the US dollar to 1.0715. The irony is that Deutsche Bank made its statement in order to confirm its strong position. I wanted the best, it turned out as always.

Dynamics of shares of European banks

Due to the banking crisis, the futures market has radically changed its opinion about the fate of the federal funds rate. Before the collapse of SVB, CME derivatives saw a ceiling at 5.75%, now they see a maximum of 5.25%. Given the fact that their opinion in February coincided with the position of Fed Chairman Jerome Powell, who insisted on continuing the cycle of tightening monetary policy, it can be assumed that if not for the bankruptcy, the FOMC forecast would have been different. Most likely, the consensus estimate would be 5.75%. In fact, it remained at a level between 5% and 5.25%.

This means that the Fed considers the banking crisis equivalent to an increase in the cost of borrowing by 50 bps. Isn't that too much? The fact is that in the United States, small banks account for only about 2% of the total volume of loans in the economy. While the large banks account for 3%. Everything else is provided by the bond and promissory note markets.

Dynamics and structure of loans in the US economy

In my opinion, the impact of bankruptcies on US GDP is exaggerated. Stabilization of the situation in the US banking system will return investors' interest in inflation, which continues to be hot. According to forecasts by Bloomberg experts, the index of personal consumption expenditures and the base PMI in February will grow by 0.5-0.6% on a monthly basis. What kind of victory over inflation can we talk about? It may well be that the theme of the Fed's continued cycle of monetary tightening has left to return. And it does not allow us to put a cross on the U.S. dollar.

At first glance, everything is fine with the euro. Despite the banking crisis, business activity in the service sector continues to grow by leaps and bounds. As a result, the composite purchasing managers' index in March reached 54.1, the highest level since June. The members of the Governing Council continue to adhere to the hawkish rhetoric. Thus, the head of the Bundesbank Joachim Nagel argues that it is necessary not only to raise rates to a restrictive level, but also to keep them there for as long as necessary to ensure sustainable price stability.

I suppose that if not for the panic around Deutsche Bank, the euro would have continued to rally.

Technically, on the EURUSD daily chart, there is a pullback to the uptrend. The rebound from the upper limit of the fair value range and the pivot level at 1.0715 suggests that the bulls are strong. Let's use the corrective movement to form longs.

The material has been provided by InstaForex Company - www.instaforex.com.

Technical analysis on META stock price for week starting March 27th, 2023.

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Blue lines- bullish channel

Black line- bearish RSI divergence

As we mentioned in our previous analysis on the META stock price trend remains bullish as long as price is inside the blue upward sloping channel. The RSI has already provided us with a new bearish divergence signal as it does not follow price to new higher highs. META stock price is vulnerable to a pull back at least towards the lower channel boundary around $193 from a close around $206 last Friday. The chances of a major reversal are increasing however we do not have a reversal signal yet. Bulls need to be cautious as we might be approaching the end of the entire upward move from the November 2022 lows.

The material has been provided by InstaForex Company - www.instaforex.com.

Technical analysis on NZDUSD for week ending March 24th, 2023.

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Black line- neckline resistance

Red line- support trend line

NZDUSD made another attempt this past week to break above the neckline resistance of 0.6265-0.6275. This was the second attempt and traders witnessed another failure and rejection. Price is now challenging the upward sloping red support trend line coming from recent lows. Support is key for the near term at 0.6185-0.6165. We find the red trend line support and the recent higher low in that area. Monday could start with a bounce off the support trend line or a break below support. Traders need to be cautious.

The material has been provided by InstaForex Company - www.instaforex.com.

XRPUSD retest of broken resistance at $0.43.

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XRPUSD is trading around $0.45 above the broken resistance at $0.43. After a sharp move towards $0.49 price turned back to back test the broken resistance. Previous resistance is now support. Price back tested the horizontal support and is now again above it. Holding above the red support is key for the continuation of the up trend. Price has started making higher highs and higher lows. XRPUSD has the potential to move above $0.50 if bulls continue to defend and stay above $0.43

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Technical analysis on EURUSD for week ending March 24th, 2023.

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Black line- neckline support

Red line- support trend line

EURUSD made new higher highs last week above 1.09 but bulls failed to hold their gains as price turned lower towards 1.0760. As we mentioned in previous posts, the key support area was around the neckline support of 1.055-1.06. Bulls have managed to hold above it and produce a strong bounce to new highs. The Head and shoulders pattern was not activated as price continues to respect the neckline support. We also keep a close eye on the upward sloping support trend line providing support around 1.0585. Failure to stay above the red trend line would be a bearish sign. Making higher highs and higher lows is key for the continuation of the up trend.

The material has been provided by InstaForex Company - www.instaforex.com.

Ichimoku cloud indicator analysis on Gold for week ending March 24th 2023.

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Gold price ended the week lower than the previous week and about the same level where it opened. Price made a new higher high but bulls were not strong enough to hold above $1,990. Short-term trend remains bullish. Gold price continues trading above the Daily Kumo (cloud). Gold price has support by the tenkan-sen (Red line indicator) at $1,947. Price could pull back towards the tenkan-sen. A deeper pull back should be expected if we break below the tenkan-sen and the kijun-sen (yellow line indicator) at $1,906.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD. PMI indices and echoes of March meetings

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For the past two days, buyers of the EUR/USD pair have been hitting the 9th figure's border, but they have been unable to break through the 1.0900 level. As a result, sellers seized the initiative and pulled the price down to the base of the seventh figure. The main cause of such a significant price decline is the strengthening of the US dollar; as a result, the US dollar index somewhat recovered its position, suggesting higher demand for the greenback. The index reached a new 7-week low yesterday, at 101.55, and was already close to a new high today, at 103.00. Conflicting PMI indices that were released throughout Friday's European session added to the pressure on the euro. As a result, the 1.0720 support level was tested by EUR/USD bears (the Tenkan-sen line on the daily chart).

So today, PMI indices were released in several European nations, reflecting a trend that the manufacturing sector is in decline while the service sector is improving. Preliminary data for March have just been released, so some inferences about the behavior of more "complicated" macroeconomic indicators are now possible. For instance, the manufacturing sector's business activity index in France rose somewhat but remained below the critical 50-point limit, coming in at 47.7 points (with growth forecast to 48.5). The situation is much better in the service sector, where the index increased to 55.5 points and appeared to be in the "green zone," marking the fastest rate of development since May last year. German data also revealed a similar pattern. The PMI index decreased, particularly in the manufacturing sector, to 44.4 points. In July 2020, this indicator was at a very low point. In contrast, the index increased to 53.9 points in the service sector (the maximum growth rate since May 2022). The European PMI indices followed the same trend as the aforementioned indicators: in the manufacturing sector, the index fell to 47 points while rising to 55.6 points in the service sector. Since May of last year, this is the best outcome.

The single currency is under a lot of pressure as a result of the released figures.

The EUR/USD bears received new support from American statistics. The overall volume of orders for durable goods declined by 1% in February, according to figures released today, with a growth estimate of 0.4% (in January, the volume decreased by 5%). Without accounting for the transport component, the indicator stayed at zero, contrary to the majority of analysts' predictions of a little but positive gain of 0.2%.

The banking crisis and the echoes of the March meetings

Despite the EUR/USD pair's increased volatility, traders have not been able to pinpoint the direction of price movement: for the bears to resume their southern movement, they must move back into the area of the sixth figure; for the northern trend to resume, they must take hold of the eighth figure. However, neither the buyers nor the sellers of the pair dare to retain sizable "one-sided" positions: as soon as the pair reaches the 1.0720 support level, bears take profits, and bulls do the same when the pair approaches the 8th price level boundaries.

The market is confused. Both sellers and purchasers of EUR/USD are confused by the extensive, yet contradictory information background.

The March ECB and Fed meetings raised more questions than they answered. On the one hand, the central banks raised rates by 25 and 50 points, respectively, following the most fundamental and anticipated scenarios. However, the Central Bank's future judgments are "covered with a fog of uncertainty."

The key point from the March meeting was reiterated by the chairman of the European Central Bank today when addressing the EU summit: the ECB is "determined" to bring inflation back to the target level of two percent, but the decision about future interest rates would be made "based on incoming data." By the way, during the March meeting of the members of the American regulator, Jerome Powell, the head of the Federal Reserve, expressed a similar viewpoint. While saying that this scenario "is not a basic one," he did not expressly rule out a decrease in interest rates this year.

In my perspective, the foreign exchange market has not yet consolidated popular opinion regarding recent events. According to EUR/USD dealers, the Fed is putting pressure on the dollar "at the moment," while the European Central Bank is putting pressure on the euro. But the trend was not started by the central banks. Regulators have not become allies for either EUR/USD buyers or sellers, having connected their future actions to inflation figures.

The ongoing worries about the status of the US financial industry further contribute to the complexity of the fundamental rebus. During the banking crisis, US authorities yesterday announced plans to take action to safeguard the safety of deposits, according to Finance Minister Janet Yellen. Yellen called a private meeting of the Financial Stability Oversight Council, which was made public today. Investors undoubtedly interpret the Ministry of Finance's recent measures as proof that regulators, the Central Bank, and the US government are still concerned about the likelihood of a deepening crisis, despite assurances from US officials to the markets that the banking industry is stable.

Conclusions

Given the high level of uncertainty, the EUR/USD pair is anticipated to vary in a wide price range in the medium term, between the middle and upper lines of the Bollinger Bands indicator on the D1 timeframe, which correspond to the 1.0670 and 1.0850 marks.

Contradictory informational signals and the dangers posed by the potential "spread" of the banking crisis will continue to cause price volatility, increasing and weakening the positions of buyers and sellers of the euro-dollar pair, respectively.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD: trading plan for the American session on March 24 (analysis of morning deals)

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I focused on the level of 1.2284 when I made my morning forecast and suggested trading decisions based on it. Let's take a look at the 5-minute chart to see what happened. Growth and the emergence of a false breakout at this level provided a sell signal in the morning, causing the pound to decline by more than 60 points. The technical situation barely changed in the afternoon.

You require the following to open long positions on the GBP/USD:

Following unfavorable reports on UK activity, the pound fell and started to correct. If similar statistics on the index of business activity in the manufacturing sector and the US services sector show growth in the afternoon, the pressure on the pair may rise. The best course of action would be to lower the price to develop a false breakout at the nearest support of 1.2189. With the potential to update the new resistance of 1.2233 developed at the end of the first half of the day, this will provide a point of entry into long positions. I wager on a more active rise of GBP/USD to a new maximum of 1.2280, where the bulls will once more encounter significant difficulties while fixing and testing this area from top to bottom. Moving averages are another factor that favors the bears. If this range is broken, there is a chance for growth at 1.2337, where I fix the profit. The pressure on the pound will rise, and it will be feasible to discuss the emergence of a new bear market if the bulls are unable to complete the tasks assigned to them and miss 1.2181 during the American session. In this situation, I suggest against making hasty purchases and only starting long positions close to the next support level of 1.2134 and only in the event of a false collapse. I'll buy GBP/USD right now only if it recovers from the low of 1.2080 with the intention of a correction of 30-35 points during the day.

For opening short positions on the GBP/USD, you will need:

Sellers took the opportunity and kept driving the pound down. Only the formation of a false breakout on it following the pound's upward movement against the backdrop of weak US data will be an excellent signal to open short positions in the anticipation of a continuation of the downward correction and the 1.2181 tests, where I expect active actions from buyers. The bears need to maintain their position below the resistance of 1.2233 throughout the second half of the day. The pressure on the pound will intensify with a breakout and reversal test from the bottom up of 1.2181, generating a sell signal with a drop to 1.2134, and the farthest aim remains a minimum of 1.2080, where I will fix profits. Buyers will attempt to return to the morning maximum of 1.2280, from where the pair has already fallen once today, with the possibility of GBP/USD growth and lack of activity at 1.2233, which cannot be ruled out. By analogy with what I previously indicated, only a false breakout at this level will provide a point of entry into short positions. If there isn't any downward movement there, I'll sell the GBP/USD pair in hopes of a quick recovery from the day's high of 1.2337, but only if the pair corrects itself by falling by 30-35 points.

Both long and short positions increased in the COT report (Commitment of Traders) for March 7. It should be understood that these data are irrelevant at this time because statistics are just now starting to catch up following the CFTC cyberattack, making the data from two weeks ago not particularly useful. I'll hold off till new reports are released and rely on more recent data. In addition to the Fed meeting this week, the Bank of England will also meet, and significant decisions regarding interest rates will be made at that meeting. Given that the current effort to combat inflation is not yet yielding many positive results, it is anticipated that the regulator may decide to sustain aggressive rates of growth in the cost of borrowing. The pound should continue to rise to new monthly highs if the Fed changes its stance but the Bank of England does not. According to the most recent COT data, long non-commercial positions increased by 1,227 to 66,513 while short non-commercial positions increased by 7,549 to 49,111, bringing the non-commercial net position's negative value down to -17,141 from -21,416 the previous week. The weekly ending price fell from 1.2112 to 1.1830.

Signals from indicators

Moving Averages

Trading is taking place below the 30 and 50-day moving averages, which suggests that the pair will continue to fall.

Note that the author's consideration of the period and costs of moving averages on the hourly chart H1 differs from the standard definition of the traditional daily moving averages on the daily chart D1.

Bands by Bollinger

The indicator's upper limit, which is located at 1.2337, will serve as resistance in the event of growth.

Description of indicators

• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 50. The graph is marked in yellow.
• Moving average (moving average determines the current trend by smoothing out volatility and noise). Period 30. The graph is marked in green.
• MACD indicator (Moving Average Convergence / Divergence - moving average convergence/divergence) Fast EMA period 12. Slow EMA period 26. SMA period 9
• Bollinger Bands (Bollinger Bands). Period 20
• Non-profit speculative traders, such as individual traders, hedge funds, and large institutions, use the futures market for speculative purposes and to meet certain requirements.
• Long non-commercial positions represent the total long open position of non-commercial traders.
• Short non-commercial positions represent the total short open position of non-commercial traders.
• Total non-commercial net position is the difference between the short and long positions of non-commercial traders.

The material has been provided by InstaForex Company - www.instaforex.com.

XAU/USD: bullish bias intact above 1,966

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XAU/USD registered strong growth but now it has found strong resistance and it could retreat a little. It's trading at 1,981 at the time of writing. The bias remains bullish despite temporary drops.

Fundamentally, the price of gold could drop in the short term after the US Flash Services PMI came in at 53.8 points above the 50.3 points expected, while Flash Manufacturing PMI jumped from 47.3 points to 49.3 points whereas analysts had expected a drop to 47.0.

Gold Rally Stopped By 1,998!

XAU/USD tested and retested 1,998 registering only false breakouts. Now, it seems very heavy. It could approach and reach the uptrend line and the 1,966 former low. These are seen as downside obstacles.

Technically, as long as it stays above the uptrend line, the bias remains bullish and it could resume its growth.

XAU/USD Forecast!

False breakdowns below the immediate support levels should announce a new bullish momentum. This could represent a new long opportunity. A valid breakout above 1,998 activates further growth and is seen as a bullish signal.

A valid breakdown below 1,966 and through the uptrend line validates a larger drop. This is seen as a selling opportunity.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD. Results of the March meeting of the Bank of England

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The resistance level of 1.2350, which corresponds to the top line of the Bollinger Bands indicator on the D1 timeframe, was nearly reached by the pound/dollar pair yesterday. After updating the price maximum of over two months, the pair made a 180-degree turn and started steadily declining. As a result, GBP/USD traders reacted to the Bank of England's inconsistent March meeting results.

Key statistics on the rise in inflation in the nation were released on the eve of the March meeting in the UK. All of the release's components exceeded expectations, placing the report in the "green zone." In February, the overall consumer price index unexpectedly increased to 10.4% y/y after declining over the previous three months. After falling to 5.8% in January, core CPI increased to 6.2%. Other inflation measures, including the producer purchase price index and the retail price index in particular, have also been made public in the "green zone."

Interestingly, the market had doubts about the Bank of England raising interest rates again before the release of inflation data; however, Andrew Bailey, the central bank's president, and several of his colleagues left open the possibility of a halt, citing a slowdown in inflation. The outcomes of the March meeting were predetermined by the inflation report.

In response, the Bank of England fully met market expectations by raising the interest rate by 25 basis points. Although the Central Bank chief's language (and the statement that accompanied it) remained final, the regulator still only temporarily supported the pound. If inflation keeps on showing upward patterns, the central bank has made it clear that it is prepared to further tighten monetary policy, but only as a last resort. The main scenario continues to be the preservation of the present situation.

The phrase "execution cannot be pardoned" can be used, to sum up, the current state of affairs.

Andrew Bailey, the governor of the Bank of England, reacted calmly to the unexpected rise in British inflation. The head of the Central Bank described this occurrence as temporary and added that, in his opinion, inflation indices will decline very fast, in a matter of months. It is important to remember that, according to the ONS comments on the most recent report, the increase in inflation in February was mostly caused by higher restaurant and hotel costs (this component increased by 12.1% at once, which is the fastest pace of growth since June 1991). Additionally, the price of food and beverages has dramatically increased: the indicator has risen by 18%. Since August 1977, this growth rate has been at its highest. After the January sales of gin, whiskey, and several beers ended, the cost of alcohol increased at bars and restaurants.

In general, Andrew Bailey agreed that the inflationary rise will pass quickly and be followed by a significant decline. In February, the Bank of England's governor similarly claimed that the British economy was about to face a recession, but today, he is "a little more optimistic."

The rhetoric is similar to that of other regulators from Britain who have recently emphasized the necessity of delaying rate increases, among other reasons because of the growing number of company complaints related to the banking crisis. By the way, two of the nine members of the Bank of England's Monetary Policy Committee again voted to maintain the current rate.

Conclusions

Numerous indirect indicators suggest that the Bank of England could have adopted a wait-and-see stance already at the March meeting, particularly in light of recent events involving the Credit Suisse bank. But an additional wave of rate hikes was justified by the unexpected increase in British inflation in February. At the same time, the regulator stated unequivocally that the Central Bank is prepared to finish the cycle of tightening the PEPP if inflation continues to rise.

The GBP/USD pair is actively dropping after a brief rise. It is interesting to see that the pound disregarded the information released today regarding the volume of retail sales in the UK. The news was far better than expected when it was released, but the British pound was still under pressure.

In my perspective, short positions continue to be more important for the pair than long ones, despite the dollar's poor positions and the fact that the greenback is also under pressure as a result of the release of the minutes from the March Fed meeting. The 1.2175 mark is the southern movement's closest target (the Tenkan-sen line on the daily chart). The following target is positioned a little lower, at a level of 1.2130, which is the lower limit of the Kumo cloud in the same timeframe.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD. Overview for March 24. Bank of England meeting: no important decisions have been made

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The overall GBP/USD currency pair is steadily rising and is within the side channel on the 24-hour TF. Recall that even in the absence of good fundamentals, the pair can increase to a level of 1.2440. Naturally, such sudden growth appears unusual, but it is flat. On the 4-hour time frame, it appears as a strong trend rather than a flat. But once again, we think that the pound's rise is largely speculative. If we look at all the most recent statistics, the majority of them have nothing to do with the British pound at all. In both the United States and the European Union, banks have failed. In both the US and the EU, appropriate decisions were made to stabilize the banking sector. There have been no "resonant" or at least "hawkish" judgments by the Bank of England. Instead, it adopted the most submissive attitude. Core inflation in the UK is rising once more and has not stopped increasing. The British population is dissatisfied with the state of the economy and wants wages to rise, while the government thinks salaries should rise more slowly so as not to push inflation to a new level of growth. As you can see, despite 11 hikes in the BA rate, inflation has not been able to go below 10%. As a result, there are a few reasons for the pound to rise at this time.

In addition, we would like to draw attention to how quickly the value of the euro and the pound has increased. We have previously stated numerous times that the entire movement of the second half of 2022, for both the euro and the pound, appears to be unfounded and moving too quickly. The same image may now be seen, but it was already on the 4-hour TF. The Fed was forced to make the difficult choice to purchase about $300 billion in bonds, which will undoubtedly be printed and may cause the dollar to weaken. But how much additional pressure will this issue exert on the US dollar? After all, even with a 5% rate increase, the American economy is still doing well.

The Bank of England is no longer trying.

In general, Mr. Bailey reported nothing significant following the BA meeting. We repeatedly heard statements like, "Everything necessary will be done to lower inflation," and similar phrases. There is nothing new. Such claims have been made for almost a year now. However, as we can see, the outcomes of the three central banks varied marginally. And the British Central Bank is in the most challenging circumstances. The fever in Britain is still going strong. Perhaps this is not evident; after all, we are not discussing Zimbabwe, but rather a nation with one of the greatest levels of life in the entire globe. Nevertheless, issues are now visible everywhere. It's uncertain what to do about inflation. It's unknown how to handle widespread strikes and protests. It's also uncertain how to handle the ongoing political turmoil. Many people groaned stoically when Rishi Sunak, who is first and foremost a financier, assumed that Mr. Sunak would immediately correct the situation. However, it turned out that Mr. Sunak and his associates do not care about the British people and will raise taxes, cut spending, and do whatever they can to enhance the status of the nation's economy. The Labour Party, which has always given regular workers greater attention, has a strong chance of winning the upcoming parliamentary elections. And if the Labor Party wins, the nation's political course will alter once more. Over the past seven years, Britain has experienced many leadership changes. As a result, decisions that are at odds with one another are frequently taken. What value do Rishi Sunak's statements that he will pursue a path of reconciliation with the European Union and views the outcome of the 2016 referendum as a "mistake" have? If it was a "mistake," the UK paid a steep price for it.

Well, by raising the rate in March by just 0.25%, the Bank of England effectively declared victory over inflation. Someone would argue that such a choice is inevitable and that the price cannot be increased further. And if you consider the situation of the economy, they are likely to be correct. However, if after 11 rate hikes, it has barely fallen by 1%, inflation from 10% to 2% will not return even in 5 years.

Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 105 points. This figure is "high" for the dollar/pound exchange rate. Thus, we anticipate movement inside the channel on Friday, March 24, with the levels of 1.2183 and 1.2393 acting as resistance. The Heiken Ashi indicator's upward reversal indicates that the upward movement has resumed.

nearest levels of support

S1 – 1.2207

S2 – 1,2085

S3 – 1.1963

Resistance levels that are closest:

R1 – 1.2329

R2 – 1.2451

R3 – 1.2573

Trading Suggestions:

On the 4-hour timeframe, the GBP/USD pair has so far begun a mild downward reversal. Currently, long positions with targets of 1.2393 and 1.2451 can be taken into consideration if the Heiken Ashi indicator reverses its trend upward. If the price is fixed below the moving average with a target of 1.2085, short positions may be considered.

explanations for the illustrations:

Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction.

Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction.

Murray levels serve as the starting point for adjustments and movements.

Volatility levels (red lines) are the likely price channel in which the pair will spend the next day, based on current volatility indicators.

The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) means that a trend reversal in the opposite direction is approaching.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD. Overview for March 24, 2023

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The EUR/USD currency pair is still increasing as if nothing has changed. The European and American currencies did not experience many incidents or breaking news on Thursday, but the Fed meeting's outcomes were made public in the evening of the previous day, which is extremely important and interesting. Unfortunately, there were no "surprises" this time. The primary event can be seen as Powell's remarks suggesting the regulator may soon stop raising the rate, in response to which the US dollar fell even further in the market. There is nothing else to note outside the fact that the key rate rose by 0.25 percent, which was to be expected. The pair's volatility was probably not overly high as a result.

From a technological perspective, nothing has changed on the 4-hour TF. We believe that the pair's continued strong and rapid growth is unjustified. We think the euro and the dollar shouldn't have risen against one another if the ECB and the Fed only increased the rate by 0.25% without making any "loud" announcements. Although the underlying background hasn't always been in its favor, the European currency has been rising for almost two weeks. Once more, we find ourselves in a circumstance where the euro is rising for some reason. We've already discussed potential drivers of the euro's growth. Instead, the scenario is as follows: there are no obvious causes for the pair's rise, but we must identify them to find a way to explain what is taking place in the market. On the other hand, there is a distinct trend in "technology," and the Heiken Ashi indicator is still holding steady. So, why not buy if there are no sell signals?

Both the ECB and the Fed pledge to keep fighting inflation.

In this section of the article, we want to call traders' attention to the rhetoric Jerome Powell and Christine Lagarde have used recently and right after their respective Central Bank meetings. Both leaders declared that maintaining price stability is still their top priority and committed to continuing to tighten monetary policy. Simultaneously, the ECB may lower the next step of tightening monetary policy to 0.25%, as discussed in January. The European Central Bank may appear to be the last to experience such a slowdown, but it also began raising interest rates far later than the Federal Reserve and the Bank of England. As a result, it is incorrect to claim that the ECB has adopted or is adopting the most aggressive monetary policy. Furthermore, we believe Christine Lagarde is lying when she says her office will do everything possible to return inflation to 2%. The ECB should increase the rate by 0.5% at each meeting, given the current level of inflation. It's possible that we are being unfair to the ECB and that it will increase the rate by 0.5 percent once again in May, but right now everything points to the contrary.

For instance, Madis Muller, a member of the ECB monetary committee, suggested on Thursday that the regulator raise interest rates a little bit further. When you need to generate money "for a long time and a lot," what does "a little more" mean? We would like to remind you that by the end of February, inflation was increasing in many EU nations. The ECB may be still relying on the long-term effects of tighter monetary policy. In other words, we aren't just talking about waiting for inflation to drop below 2% anymore. It involves keeping up the pressure on its decline. Even though energy prices were falling globally at the time, the consumer price index wasn't in a hurry to decrease. Recall that the central banks cited the rise in oil and gas prices as one of the primary causes of the increase in inflation last year. As a result, prices have decreased significantly, but inflation is taking its time to decline. Key rates were also actively raised at the same time, and QT programs were implemented. It turns out that neither the EU nor the USA, and even more so the UK, were able to reduce inflation by even two times when all three factors were combined. And in light of this realization, central banks are slowing the growth of interest rates to a formal level. Is the battle against inflation over, or are we in for a protracted period of rapid price growth?

As of March 24, the euro/dollar currency pair's average volatility over the previous five trading days was 103 points, which is considered "high." As a result, we anticipate that the pair will move on Friday between 1.0746 and 1.0951. The Heiken Ashi indicator will turn back up to signal the start of the upward movement.

Nearest levels of support

S1 – 1.0742

S2 – 1.0620

S3 – 1.0498

Nearest levels of resistance

R1 – 1.0864

R2 – 1.0986

R3 – 1.1108

Trading Suggestions:

A round of downward correction has begun for the EUR/USD pair. Currently, we can take into account opening additional long positions with targets of 1.0951 and 1.0986 if the Heiken Ashi indicator reverses its trend upward. After the price is fixed below the moving average line, short positions can be opened with a target of 1.0620.

Explanations for the illustrations:

Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction.

Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction.

Murray levels serve as the starting point for adjustments and movements.

Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day.

A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD. Overview for March 24: Prospects for the British currency in the coming weeks.

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The GBP/USD currency pair has been rising for the past two weeks as well, but it remains limited to the side channel on the 24-hour TF. However, both euro currencies have experienced only a minor correction. Over the past few months, the euro currency has adjusted more strongly than the pound. The growth over the past six months has been too rapid and strong, far from always justified, and the correction that followed has been too weak and unconvincing. We can make the same claim about the pound as we can about the euro. The market indicates that it is not yet prepared for significant sales, although both pairs should logically soon start a new cycle of tangible decline. We have taken into consideration some of the factors in the article on the euro/dollar that prevent the growth of the euro and the pound at this time. Here, we'll speak solely of the pound sterling.

What is going on with the UK economy right now? The economy, like that of the European Union, is on the verge of a recession, which officials are working hard to avoid or at least smooth out. According to the official version, the recession will start in 2023 but last only five quarters, as opposed to the initial prediction of eight. The overall decline in the British economy won't be more than 1%. Unavoidably, a recession will occur, and its severity will depend less on predictions made by the Bank of England and Rishi Sunak and more on the size of the rate that BA will achieve this year. Since the British economy has not been stable for a very long time, anything can happen with the rate.

Inflation is becoming the most important statistic, not GDP. Even those who did not trade the pound this week were let down by this indication. A strong rate of growth has resumed for the consumer price index. And if we observed a more or less significant slowdown in the rate of price increase in the European Union or the United States, the UK experienced a fall in prices of 1% for three months, which is hardly even a "slowdown." All of this simply serves to indicate that the regulator must continue raising the rate at the fastest possible rate in addition to tightening monetary policy. However, since the rate has already risen to 4.25%, BA is no longer able to increase it by 0.5% at each meeting. The British pound no longer has even a theoretical advantage over the dollar because the Fed and BA can raise the rate at an equal rate for the remainder of this year.

The economy will be discussed next. It's hard to say that the American economy is in a worse state than the British one, notwithstanding the simultaneous failure of three banks in the United States. Many members of the cabinet, particularly Rishi Sunak, have said that the British economy has not even fully recovered from Brexit. In the UK, there is a severe shortage of professions that were previously filled by foreign workers. However, with Brexit, the requirements for staying in the nation became stricter, and as a result, migrants now prefer other European nations where obtaining a work permit is considerably simpler. Both the government and the British people agree that salaries are expanding very slowly and very quickly, respectively. The government considers the 6% wage increase to be problematic because they believe it would encourage inflation to continue rising. The British desire an increase in salaries because they perceive an issue with the 6% pay growth and the 10% inflation rate. All of this leads to new political issues because the Conservative Party may perform horribly in the upcoming legislative elections. As a result, we may say that the UK is no better than the US in terms of politics, the economy, or interest rates. It is quite challenging to predict why the pound is rising and the dollar is declining at the moment. Of course, two reasons somewhat support this action. The first is flat on a 24-hour TF, while the second represents the Fed's $300 billion QE program. However, none of these variables suggests that the pair will rise beyond 1.2440.

Over the previous five trading days, the GBP/USD pair has experienced an average volatility of 105 points. This figure is "high" for the dollar/pound exchange rate. Thus, we anticipate movement inside the channel on Friday, March 24, with the levels of 1.2183 and 1.2393 acting as resistance. The Heiken Ashi indicator's upward reversal indicates that the upward movement has resumed.

Nearest levels of support

S1 – 1.2207

S2 – 1.2085

S3 – 1.1963

Nearest levels of resistance

R1 – 1.2329

R2 – 1.2451

R3 – 1.2573

Trading Suggestions:

On the 4-hour timeframe, the GBP/USD pair has so far begun a weak downward reversal. Currently, long positions with targets of 1.2393 and 1.2451 can be taken into consideration if the Heiken Ashi indicator reverses its trend upward. If the price remains below the moving average with a target of 1.2085, short positions may be considered.

Explanations for the illustrations:

Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction.

Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction.

Murray levels serve as the starting point for adjustments and movements.

Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day.

A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.

The material has been provided by InstaForex Company - www.instaforex.com.

March 24, 2023 : EUR/USD daily technical review and trading opportunities.

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The price zone around 1.1500 has applied significant SELLING pressure upon the previous ascending movement towards it.

Shortly after, the EUR/USD pair has been moving downwards reaching the price levels of 1.0850, 1.0400, 1.0000 and recently 0.9600.

The market has remained under buying pressure until a plateau level occurred around 1.0800-1.0850. This was followed by a significant SELLING price action leading to the recent price decline.

The price level of 1.0800 remained a significant resistance level to offer SELL opportunities until the current upside movement was expressed.

The next target is located around 1.1000 where the previous daily top is located.

On the other hand, any downside movement towards 1.0300 should be watched for BUYING pressure where a new upside movement can be established.

The material has been provided by InstaForex Company - www.instaforex.com.

EUR/USD. Overview for March 24: Prospects for the euro currency in the coming weeks.

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The ECB began raising interest rates six months later than the Fed, causing the euro to decline sharply. The scenario changed to the contrary in the second half of 2023. In America, rumors of a slowing in the rate of monetary policy tightening and a decrease in inflation started to emerge. The world's reserve currency and the strongest economy in the world are still slowing down, but the rate is consistently rising as prices continue to increase at a reasonably rapid rate.

Therefore, the Fed's concern over high inflation and willingness to hike the rate as high as feasible solely to relieve pricing pressure is not surprising. If the growth of the euro/dollar pair in the second half of the year was rather predictable (albeit, in our opinion, excessively strong), then the growth of the euro currency in the last two weeks is already surprising. We alerted traders a few months ago to the fact that there aren't many local reasons supporting the euro. Yes, the Fed started to slow down rate increases, and there was discussion of the potential rejection of tightening monetary policy. However, the rate is still rising and has been doing so for some time. As a result, both rates are growing, but the US dollar no longer has an advantage.

The emergency QE program implemented by the Fed following the simultaneous failure of three large banks in the United States may be one of the causes of what is currently occurring. This program has a budget of roughly $300 billion, which will be printed and given to the Ministry of Finance for use in both returning money to bank depositors and stabilizing the financial sector. We are not very concerned about the use of this money, though. The fact that they will be printed and put into the economy is of significance to us. At the same time, the Fed continues to pursue the QT program, which entails lowering the money supply and is used to tighten monetary policy. It turns out that the dollar has been struggling for the past six months as a whole, but recent news has made things considerably worse.

From our perspective, the recent decline in the value of the US dollar is nonsensical. Yes, printing 300 billion dollars is a significant amount that will once again come out of thin air, but the Fed also created several trillion dollars in 2020 and 2021, more than doubling the amount of money in circulation. Why does the American dollar suddenly decline when it reaches the "pathetic" 300 billion when it did not pay attention to this moment at the time? Neither the ECB nor the Fed is involved. The rate is increasing, but we are only referring to the recent hikes that were reported. The rate may only rise by 0.25 percent in May, and it is unclear how much further the ECB can raise the rate. After all, unlike the United States, Europe cannot ignore economic growth. The EU economy has been extremely close to entering a recession for some time. The likelihood of a severe recession increases as the pace of growth rises. Inflation in the European Union may begin to rise again, as it has in France and Germany, as well as many other EU members. As a result, the ECB rate must be increased even further, a move that the Central Bank might not be prepared to make.

As of March 24, the euro/dollar currency pair's average volatility over the previous five trading days was 103 points, which is considered "high." As a result, we anticipate that the pair will move on Friday between 1.0746 and 1.0951. The Heiken Ashi indicator will turn back up to signal the start of the upward movement.

Nearest levels of support

S1 – 1.0742

S2 – 1.0620

S3 – 1.0498

Nearest levels of resistance

R1 – 1.0864

R2 – 1.0986

R3 – 1.1108

Trading Suggestions:

A round of downward correction has begun for the EUR/USD pair. Currently, we can take into account opening additional long positions with targets of 1.0951 and 1.0986 if the Heiken Ashi indicator reverses its trend upward. After the price is fixed below the moving average line, short positions can be opened with a target of 1.0620.

Explanations for the illustrations:

Determine the present trend with the use of linear regression channels. The trend is now strong if they are both moving in the same direction.

Moving average line (settings 20.0, smoothed): This indicator identifies the current short-term trend and the trading direction.

Murray levels serve as the starting point for adjustments and movements.

Based on current volatility indicators, volatility levels (red lines) represent the expected price channel in which the pair will trade the following day.

A trend reversal in the opposite direction is imminent when the CCI indicator crosses into the overbought (above +250) or oversold (below -250) zones.

The material has been provided by InstaForex Company - www.instaforex.com.

March 24, 2023 : EUR/USD Intraday technical analysis and trading plan.

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In the intermediate-term, the pair is just above the newly visited price levels around 0.9600 that haven't been visited since 2002.

That's why, some bullish recovery was recently demonstrated especially around such an important psychological support.

The nearest supply level was located around 1.0100 which failed to provide enough bearish pressure.

On the other hand, Intensive bullish price action was demonstrated around the lower limit of the depicted movement channel. Initial bullish targets around 1.0150 and 1.0500 were already reached.

Price action around the key-level of (1.0550-1.0600) was quite bullish. That's why, further bullish continuation towards 1.0800 was demonstrated.

Moreover, more bullish advancement towards the nearest supply zone around 1.1150-1.1200 can be expected.

On the other hand, any bearish pullback towards the price levels of 1.0000 should be considered as a valid long-term BUY opportunity.

The material has been provided by InstaForex Company - www.instaforex.com.

March 24, 2023 : GBP/USD Intraday technical analysis and significant key-levels.

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Previously, the GBP/USD pair remained under bearish pressure to challenge the significant daily bottom established around 1.1750 which was bypassed shortly after.

However, considerable bullish momentum was initiated around 1.0400-1.0600 that could prevent further bearish decline.

As the market was pursuing the current bullish movement, the newly-established ascending bottoms around 1.1150 and 1.1750 remained defended by the bulls. That's why, further bullish continuation above 1.1765 was expected.

Price action around 1.2340 was being watched for bearish rejection and a short-term SELL Entry. It was running in profits until another bullish bounce has been expressed.

Recently, the GBPUSD bulls failed to record a new high above 1.2200. Instead, a descending high was established around the same price level.

Bearish pullback pursued towards the price levels of 1.1800. This was considered for a valid BUY Entry with initial target around 1.2350.

Please take into consideration that bullish breakout above 1.2340 will probably enable further advancement towards 1.2700. therwise, another bearish correction towards 1.1750-1.1800 may be expressed.

The material has been provided by InstaForex Company - www.instaforex.com.

GBP/USD: reversal pattern activated

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The GBP/USD pair crashed in the short term as the Dollar Index rebounded. Yesterday, I talked about exhausted buyers and about a Rising Wedge pattern. The pair's trading at 1.2225 at the time of writing above today's low of 1.2203.

Fundamentally, the British Pound could lose some ground versus its rivals after the UK Flash Manufacturing PMI and Flash Services PMI came in worse than expected. On the other hand, the US reported mixed data. Durable Goods Orders and Core Durable Goods Orders came in worse than expected, while Flash Manufacturing PMI and Flash Services PMI reported better than expected data.

GBP/USD Minor Rebound!

As you can see on the H1 chart, the rate ignored the uptrend line and 1.2260 confirming a downside movement. I've told you in my last analysis that activating the Rising Wedge pattern should bring new short opportunities.

Now, it has tried to rebound to test and retest the weekly R1 (1.2250) and the 1.2260 static resistance. Technically, the former low of 1.2178 stands as a critical downside obstacle.

GBP/USD Outlook!

A new lower low, a bearish closure below 1.2178 activates a further drop and is seen as a selling signal.

The material has been provided by InstaForex Company - www.instaforex.com.

Analysis and trading tips for EUR/USD and GBP/USD on March 24 (US session)

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Euro and pound fell as risk appetite dwindled due to weak economic activity in both the eurozone and the UK. But activity data from the US, which is due out this afternoon, could also disappoint, so the two currencies have the chance to see a correction.

EUR/USD

For long positions:

Buy euro when the quote reaches 1.0761 (green line on the chart) and take profit at the price of 1.0829.

Euro can also be bought at 1.0721, but the MACD line should be in the oversold area as only by that will the market reverse to 1.0761 and 1.0829.

For short positions:

Sell euro when the quote reaches 1.0721 (red line on the chart) and take profit at the price of 1.0672.

Euro can also be sold at 1.0761, but the MACD line should be in the overbought area as only by that will the market reverse to 1.0721 and 1.0672.

GBP/USD

For long positions:

Buy pound when the quote reaches 1.2223 (green line on the chart) and take profit at the price of 1.2265 (thicker green line on the chart).

Pound can also be bought at 1.2196, but the MACD line should be in the oversold area as only by that will the market reverse to 1.2223 and 1.2265.

For short positions:

Sell pound when the quote reaches 1.2196 (red line on the chart) and take profit at the price of 1.2145.

Pound can also be sold at 1.2223, but the MACD line should be in the overbought area as only by that will the market reverse to 1.2196 and 1.2145.

The material has been provided by InstaForex Company - www.instaforex.com.

Trading tips for EUR/USD

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Following the release of GDP data in Spain and manufacturing activity in Germany, EUR/USD pulled back from the weekly high, opening up good price levels for long positions in the market.

At the time of writing, there is a three-wave (ABC) pattern, in which wave A represents the buying pressure from early this week. Traders should consider taking long positions from the 50% retracement level, and then exit the market by taking profit upon the breakdown of 1.10300.

This trading idea is based on the "Price Action" and "Stop hunting" methods.

Good luck and have a nice day! Don't forget to control the risks.

The material has been provided by InstaForex Company - www.instaforex.com.

Trading Signal for USD/JPY for March 24 - 27, 2023: buy above 130.10 (3/8 Murray - rebound)

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Early in the US session, the Japanese Yen is trading around 130.10 bouncing after reaching a low around 129.62, the level which coincides with 3/8 Murray (129.68).

Japanese yen like gold is a safe haven asset and it has been strengthening since the beginning of the month. It is now trading at oversold levels, so a technical bounce is likely in the coming days.

In case the Yen trades above 129.68 and above the psychological level of 130.00, it could reach the top of the downtrend channel of 131.50.

A sharp break of the downtrend channel formed since March 3 could be a sign of a trend reversal and the yen could climb above the 200 EMA located at 133.44 and finally hit 6/8 of Murray located at 135.22.

On the other hand, in case the USD/JPY pair falls and rebounds back to the 129.68 zone, it will be considered a signal to buy with targets at 131.25 and 131.46 (4/8 Murray).

Our trading plan for the next few hours is to buy at current price levels around 130.10, with targets at 131.46 and 133.44 (200 EMA). The eagle indicator has been giving a positive signal since March 20 which supports our bullish strategy.

The material has been provided by InstaForex Company - www.instaforex.com.

Bitcoin maintains balance after Fed meeting

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Bitcoin has managed to rise to $29,000 over the past several days. BTC continues to hover near that level at this point. The technical situation has not changed at all in the last few days, despite the crazy fundamental background of the past two weeks. It pushed Bitcoin up somewhat, even though it may not be obvious to many traders. However, first things first. The new ascending trend line currently favors bullish traders, but as we said before, BTC is approaching the level of $29,750, which acts as the nearest target level. Therefore, it needs to break above it in order to rise further.

This week, the Federal Reserve and the Bank of England conducted policy meetings. The cryptocurrency market has ignored the UK regulator, but the same cannot be said about the Fed. A few months ago, we said Bitcoin could rise in theory as the Fed approached the end of its monetary tightening cycle. In reality, Bitcoin started moving up even earlier. First of all, it was provoked by sharp drop of inflation in the US in January, and then - by banking crisis in the United States that forced the Fed to launch a new $300 billion stimulus program. This implies that this money will simply be printed, inflating the money supply yet again. Therefore, this money will have to be at least partially deposited in some market. Why not in the cryptocurrency market? As a result, traders rushed to buy Bitcoin, expecting it to rise again amid a declining US dollar.

Furthermore, Jerome Powell's statement that the Fed funds rate hikes could be over in the near future have played their role. Solid reasons to buy BTC appeared only two weeks ago, but these factors are likely no longer affecting the market. Now, the interest rate will remain high for a long time, and there are still no factors that could lead to a BTC uptrend. Whatever upside potential it had has already been used up. However, fundamental factors are quite unpredictable. Few people could have foreseen the collapse of three banks in the US, and more could follow. Bitcoin could take advantage of the turmoil in the global financial system. Because of that, traders should be ready for any scenario and should not forget about technical analysis, the best way to visualize what is going on in the market.

According to the D1 chart, BTC broke through the key level of $25,211. Traders might have opened long positions at that moment. These positions can be kept open targeting $29,750. If Bitcoin bounces off these level, a sell-off may begin as the instrument need to retrace after another 30% jump. If BTC breaks above $29,720, long positions can be opened or old ones can be kept open targeting $34,267

The material has been provided by InstaForex Company - www.instaforex.com.

USD/CAD outlook for March 24, 2023

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Today, the focus of market participants following the Canadian dollar quotes will be the release (at 12:30 GMT) of retail sales report by Statistics Canada. And this will be perhaps the last important information on the Canadian dollar this month. Next week, the dynamics of the USD/CAD pair will be mainly determined by the dynamics of the U.S. dollar.

From a technical point of view, the pair remains in the long-term bull market zone above the key support levels 1.3450 (144 EMA on the daily chart and the 23.6% Fibonacci level in the last strong wave of growth from 0.9700 to 1.4600), 1.3365 (200 EMA on the daily chart), 1.3310 (50 EMA on the weekly chart).

Long positions remain preferable, despite the apparent overbought nature of the pair.

Alternatively, the signal for opening short positions could be a breakdown of the important short-term support level 1.3708 (200 EMA on the 1-hour chart) and the support level 1.3700, which is the line of balance.

In this case, a decrease to the lower border of the range and levels of 1.3625, 1.3600 is possible, from which it is possible to increase long positions and place pending orders to buy.

Support levels: 1.3708, 1.3700, 1.3625, 1.3600, 1.3500, 1.3450, 1.3400, 1.3365, 1.3310, 1.3280, 1.3200, 1.3030

Resistance levels: 1.3800, 1.3860, 1.3900, 1.3970, 1.4000

Trading scenarios

Sell Stop 1.3760. Stop-Loss 1.3810. Take-Profit 1.3708, 1.3700, 1.3625, 1.3600, 1.3500, 1.3450, 1.3400, 1.3365, 1.3310, 1.3280, 1.3200, 1.3030

Buy Stop 1.3810. Stop-Loss 1.3760. Take-Profit 1.3860, 1.3900, 1.3970, 1.4000

The material has been provided by InstaForex Company - www.instaforex.com.

Bitcoin at $1 million

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Amid the banking crisis and the Fed's aggressive policy with additional tightening, bitcoin and the wider crypto market are beginning to be seen as a safe haven.

According to Robert Kiyosaki, author of personal finance books, the dominance of the U.S. dollar as the world's reserve currency is coming to an end. In his opinion, Gresham's law is now in effect, when bad money crowds out good money. Gold and silver should fill the void left by the collapse of fiat currencies.

Kiyosaki also drew attention to the growth in the BRICS member countries, which include Brazil, Russia, India and China. That is approximately 42.5% of the world's population.

Along with gold and silver, Kiyosaki staked bitcoin. And he himself became its supporter, calling the world of cryptocurrencies "people's money."

Bitcoin's strong performance in 2023, when it outperformed gold, is a sign that the top cryptocurrency is starting its new supe rcycle.

Bitcoin is outperforming commodities, and is now almost 10 times ahead of gold. Although gold was considered the most profitable commodity. A global banking crash could mark Bitcoin's maturation since it was born after the great financial crisis.

The strength of bitcoin compared to most assets is that bitcoin is able to provide digital trading potential.

Despite falling commodity prices, central banks continue to tighten policy, and the banking crisis exacerbates serious risks of an economic reset.

As for where crypto proponents think Bitcoin is heading in 2023, several influencers have made wild estimates of a BTC price of $1 million.

But legendary investor Peter Brandt offered a more measured estimate that Bitcoin is 12 months away from new highs.

And some believe that in the next 90 days, bitcoin is unlikely to approach 50,000, let alone 1 million.

The material has been provided by InstaForex Company - www.instaforex.com.

Premarket trading on March 24; stock indices drop again

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Futures on US stock indices fell on Friday morning, losing all their early gains. European stocks also nosedived due to concerns about the stability of the banking sector.

The European Stoxx Europe 600 index sank by more than 0.7% after Deutsche Bank AG shares plummeted by 15%. Futures on the S&P 500 dropped by 0.7%. Futures on the Nasdaq 100 decreased by 0.4%. The S&P 500 lost about 0.5% from the opening level.

It appears that after the rate hike by the Fed, traders are cautious about the banking crisis triggered by monetary tightening. Yesterday, shares of companies from the banking sector dropped after Treasury Secretary Janet Yellen told lawmakers that regulators would be prepared for further steps to protect the banking system if necessary. The KBW Bank Index (BKX), a proxy for banks, fell to its lowest level since November 2020.

It is not surprising that American banks decided to take full advantage of the Fed's lending program. They boosted borrowing under the central bank's newly launched Bank Term Funding Program to $53.7 billion in a week, up from $11.9 billion borrowed last week.

Therefore, worries over the banking sector are unlikely to ease in the near future. Volatility will remain high as policymakers need to convince investors that the financial system is stable. Financial conditions will also tighten in the near future, which increases the risk of a hard landing even if central banks take a softer stance.

Government bonds dropped sharply following increased borrowings. Therefore, 2-year Treasury notes fell by 26 basis points, while 10-year government bonds in Germany and the UK sank by more than 15 points.

The US dollar index jumped after its six-day losing streak. Oil prices declined because of renewed concerns about the stability of the financial sector and a stronger US dollar. Gold rose higher.

Investors are now awaiting the US PMI Indices for February with bated breath after the woes in the banking sector and the possibility of further monetary tightening by central banks. If the figures are positive, it will boost expectations of another rate hike by the Fed in the future.

As for the technical outlook of the S&P 500, the pressure on risk assets has returned. Further growth of the index may occur only if the bulls push it above $3,920 and $3,950. Bulls also need to take control over $3,977. It will bolster bullish momentum. In case of further downward movement amid of the lack of drivers and demand, buyers should defend $3,890. If the pair declines below this level, the index may decrease to $3,860 and $3,840.

The material has been provided by InstaForex Company - www.instaforex.com.