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Dollar Index -16/03/2023-• Today I am discussing the long term trend for the USD • I went back in history (2014) to give you a quick study on the US Dollar's behavior throughout the years • Back in 2014, the Dollar index rallied from the 80s level to the 100-105 as you can see the sharp up trend • After that, correction started and bottomed as soon as we touched the 50% retracement level • We then traded sideways between the peak and the 50-61.8% retracement level for few years • In July 2021, the rally resumed and broke the previous swing highs and surged to levels around 115 ( same rally as the one back in 2014-2015 ) • The greenback reached the top in October 2022 and retraced back to the 50% level. • If the history were to repeat itself, we will be trading somewhere between the recent swing high and the 50-61.8% retracement level before breaking up again. • The other scenario is breaking down below the highlighted support area which is very critical in this scenario and going back to lower levels ( below 100 ) • Given all the uncertainties in the market currently, the bullish scenario is more favorable, given the safe haven attribute the US Dollar has, and this doesn't seem to change in the near term.
TVC:DXY
by RamziAbouAbdallah-CMT
EUR/USD -16/03/2023-• Technical picture in favor of the bears • 2 bearish patterns on daily chart • First pattern is the broadening pattern highlighted in yellow • Second pattern is head and shoulders highlighted in green • 1.0500 support is very critical at the moment ( neckline of head and shoulders and previous pivot low ) • Yesterday's drop penetrated the 20 MA which is now acting as resistance • Bulls need to overcome 1.0730 resistance to turn the trend in their favors
by RamziAbouAbdallah-CMT
How FED / ECB Interest rates set trendsWatch how interest rates decisions set trends in EURUSD and Dollar Index impacting the entire forex market. I marked all the previous interest hike decisions by FED and ECB. 2023 EURUSD bullish reversal was triggerred by ECB starting to raise iterest rates (after EUR hit the alarming 1.00 level). EUR might continue bullish until next tow hikes. From what I read ECB does not plan to hike rates for the rest of the year after May meeting (rates will stay at 4), so it is likely to trigger bearish reversal from May. Likelwise, 2020 EUR bullish ride (and dollar weakness) was triggerred by FED lowering interest rates (in March 2020) after COVID hit. FOR EDUCATIONAL PURPOSES ONLY. Good luck in your trading! God bless!
Education
by ICFX
XAUEUR breaking the up trend channel for more upside push!At the beginning of the year OANDA:XAUEUR broke the down side channel. While banks are bankrupting, we see once again gold is the safe heaven for many people. Most importantly for the central banks which have been accumulating physical gold. FED and ECB will struggle to further increase the interest rates. We may see new ATH within a couple of months! Crazy times again. Disclaimer – WhaleGambit. Please be reminded – you alone are responsible for your trading – both gains and losses. There is a very high degree of risk involved in trading. The technical analysis , like all indicators, strategies, columns, articles and other features accessible on/though this site is for informational purposes only and should not be construed as investment advice by you. Your use of the technical analysis , as would also your use of all mentioned indicators, strategies, columns, articles and all other features, is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness (including suitability) of the information. You should assess the risk of any trade with your financial adviser and make your own independent decision(s) regarding any tradable products which may be the subject matter of the technical analysis or any of the said indicators, strategies, columns, articles and all other features.
OANDA:XAUEURLong
by WhaleGambit
British pound's rally fizzles as markets settle downThe British pound has reversed directions after an impressive rally that saw GBP/USD climb 370 points. In the European session, GBP/USD is trading at 1.2154, down 0.24%. The collapse of the Silicon Valley Bank (SVB) on Friday sent the financial markets into turmoil on Monday. US bank stocks declined sharply, while safe-haven gold powered higher. The US dollar retreated against the major currencies and the 2-year Treasury yield fell almost a full point. Tuesday has brought better news, as the markets appear to have settled down. The US dollar has regrouped and is higher against the majors. There is an uneasy calm in the air, but that doesn't necessarily mean that this latest crisis is behind us. Investors are on alert and will be very sensitive to new developments and any negative news could renew market volatility. The Fed and Treasury Department acted quickly to protect depositors and President Biden sent a reassuring message at an impromptu television address, but the collapse of the 16th largest lender in the US means it's unlikely to be "business as usual" for some time. It was just a week ago that Fed Chair Powell's hawkish testimony on the Hill raised expectations of the Fed delivering a 50-bp increase at the March 22 meeting. Those expectations have vanished into smoke, with the markets now expecting a 25-bp hike, with an outside chance of a pause.  We could see further market repricing after today's CPI report, with headline CPI expected to fall to 6.0%, down from 6.4%. In the UK, the employment report was within expectations. The unemployment rate remained at 3.7%, shy of the estimate of 3.8%. Hourly earnings fell to 5.7%, as expected, down from an upwardly revised 6%. The pound hasn't reacted to the release and the data is unlikely to change minds at the Bank of England, which is expected to raise rates by 25 bp at the March 23 meeting. GBP/USD tested resistance at 1.2113 earlier in the day. Above, there is resistance at 1.2294 There is support at 1.1984 and 1.1854
by OANDA
1
SVB: Understanding and Managing Interest Rate Risks CBOT: 10-Year Treasury Futures ( CBOT:ZN1! ) Last Wednesday, Silicon Valley Bank (SVB) NASDAQ:SIVB announced that it incurred $1.8 billion loss in the sales of its bond portfolio and sought to issue new shares. Within 48 hours, a bank-run induced by panic customers brought down the legendary bank. On Friday, US banking regulators seized control of SVB. By Sunday, the Treasury Department, the Federal Reserve, and Federal Depository Insurance Corporation (FDIC) jointly announced a rescue plan that would make whole all depositors. However, SVB shareholders are not protected. Why has happened to the well-respected and once well-capitalized bank? Opportunity and Risk Go Side-by-Side Traditional banks seldom extend credit to startups, which are mostly under-collateralized, with little or no profit and big uncertainties about their future survival. SVB developed a niche competitive edge to provide banking services to companies funded by venture capitals. In the past 40 years, it nurtured many high-profiled tech startups through their entire life cycle, from early-stage to IPO and to Big-Tech giants. If Sequoia Capital invested in your firm and you apply for a loan from a commercial bank, you can expect the loan officer to ask: “Sequoia Who?” But if you go to SVB, they would say: “$10 million will be in your account tomorrow.” VCs are exceptionally good at spotting future technological trends, and they follow a rigorous due diligence process to pick investing targets. By working with VCs and startups closely, SVB created an ecosystem that foster technological innovations, and grew to become the 16th largest US bank by deposit. However, SVB’s concentration in the high-tech sector also make it vulnerable to a boom-and-bust cycle. Last year, bear market hit the industry hard. Publicly traded firms couldn’t raise money with falling share prices. Private companies found the path to IPO got blocked. As startup clients withdrew deposits to keep their companies afloat, SVB is short on capital. It was forced to sell most available-for-sale bonds at a huge loss. Bad news travelled fast in close-knit tech investing community. VCs urged their portfolio companies to get the hack out of SVB. All told, customers withdrew a staggering $42 billion of deposits on Thursday. By the close of business day, SVB had a negative cash balance of $958 million, according to the filing, and this triggered the government takeover. A Commercial Bank with a Failing Grade In fiscal year 2022, SVB earned $4.5 billion in Net Interest Income (NII) and $1.7 billion in non-interest income. When you take away the bells and whistles, SVB is by large a commercial bank. About 73% of its revenue comes from taking in deposits at a low interest rate and making loans at a higher interest rate. Based on its 2022 10K filing, SVB managed $209.2 billion in total interest-bearing asset and earned $5.7 billion. This represented an effective yield of 2.73%. During the same period, SVB paid out $1.2 billion in funding cost, which equated to 0.57%. • Therefore, in 2022, its NII = 2.73% - 0.57% = 2.16% • In comparison, its NII for year 2021 was 2.02% (=2.09% - 0.07%). • On the surface, SVB was doing well, with NII spread increasing by 14 basis points year-over-year. What has gone wrong then? Dive deeper into SVB’s balance sheet, we see the long-dated Treasury bonds and illiquid mortgage-backed securities it held got hammered by the rising interest rates. Simply put, SVB got its interest payment back, but the value of its investment principal eroded in a huge way in a rate-hiking environment. All in all, managing interest rate risk is at the core of banking business. A Naked Bond Portfolio In its 10K, SVB puts its investment portfolio in Available-For-Sales (AFS), Held-To-Maturity (HTM) and Non-marketable securities categories. AFS balance was $26.1 billion as of December 31st, including: • U.S. Treasury securities $ 16,135m (61.9%) • Agency-issued MBS $6,603m (25.3%) • Agency-issued CMBS $1,464m (5.6%) • Foreign government debt securities $1,088m (4.2%) • Agency-issued CMO—fixed rate $678m (2.6%) • U.S. agency debentures $101m (0.4%) • Total AFS securities $26,069m (100%) Last week, SVB sold $21 billion in the AFS portfolio and incurred a loss of $1.8 billion, or -8.6%. AFS assets are marked to market every quarter. My understanding is that the loss figure was based on selling price vs. year-end fair market value. Total loss calculated from purchasing price could be much bigger, as these bonds may have been marked down multiple times during previous quarters. Evidence: Since March 2022, CBOT 10-Year Treasury Futures (ZN) price went down from 124 to 109 (-12%) and 30-Year Treasury Bond (ZB) fell from 152 to 118 (-22%). CBOT Treasury futures market, with its sheer size and liquidity, makes it the marketplace of choice to manage interest risk in times of uncertainties. Each ZN contract has a notional value of $100,000. • On Monday March 13th, daily trading volume is 3,760,911 lots, which translates into total notional of $376 billion. Open interest (OI) stands at 4,311,338, or $431 billion in notional. • Volume and OI for ZB are 719,518 and 1,209,881, respectively. Notional value for each is $72 billion and $121 billion, respectively. What’s Next On Friday, Signature Bank customers spooked by the SVB collapse withdrew $10 billion. That quickly led to the bank failure. Regulators announced Sunday that Signature was being taken over to protect its depositors and the stability of the U.S. financial system. Despite government intervention over the weekend, fear ran contagious through the financial industry this Monday. San Francisco’s First Republic Bank, which had $212 billion in assets at the end of 2022, saw its stock price plunge as much as 70% when the market opened Monday morning. By market close, US stock market stabilized. Investors wonder if a banking crisis could be the final punch to end the year-long Fed rate hikes. Lessons Learnt As investors, we usually allocate our financial assets across various instruments, such as stocks, bonds, and derivatives. The 60 (stock) / 40 (bond) portfolio is the most popular advice from Wall Street. People generally pay more attention to what stocks to buy and hold, but we may not think twice about managing interest risk in a rising rate environment. The SVB fallout shows that even the safest, risk-free Treasury bonds, if not actively managed, could fall prey to interest rate changes and liquidity risk, resulting in loss of market value. For me, this is a wake-up call and a good time to review my bond holdings. Some may be hidden in a 401K retirement plan. Hedging interest rate risk with CBOT Treasury futures and Micro Yield futures could go a long way to stay solvent. A View on Interest Rate Trajectory Today, the Bureau of Labor Statistics reports that the consumer price index rose 0.4% in February and 6% from a year ago, in line with market expectations. This is the most recent data the Fed will consider before it makes interest decision on March 22nd. Inflation is cooling, but still too high. A bank run shows how damaging rising interest rate is to the economy. Whether the Fed will continue its rate hikes, pause them, or end them altogether, I think all options are open. In my view, interest rate is in an uncharted territory once again. With investors in panic mode, they will likely overreact to the Fed decision. This may be a good time to place an order of out-of-the-money options on CBOT 10-Year Treasury Futures (ZN). On March 14th, the June ZN contract is quoted at 113’220. Quoting convention in Treasury market is 100 and 1/64th. The quote reads as (113 + 22.0/64), or $113.34375 on $100 par value. If the Fed slows or pause the hike, Treasury price will likely go up. Call options would be appropriate in this case. • The 115-strike call is quoted 0’20 (=20/64). This is converted into $312.5 premium on the $100,000 contract notional for each contract. If the Fed stays its course on fighting inflation, Treasury price could fall. And put options would be a way to express your view. • The 112-strike put is quoted 0’14, or $218.75 premium per contract. Happy Trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
CBOT:ZN1!Long
by JimHuangChicago
6
EUR/USD Rises Past 1.07, Investors Bet On A Less Aggressive FedThe EUR/USD pair advanced beyond the 1.0700 level on Monday despite the risk-off environment prompted by the Silicon Valley Bank shutdown. The greenback suffered the pressure of lower U.S. yields amid expectations the Federal Reserve will have to hold the trigger on rates amid the banking sector turmoil and somewhat disappointing jobs data. At the time of writing, the EUR/USD pair is trading at 1.0730, up 0.85% on the day, after hitting a one-month high of 1.0738. Meanwhile, the DXY Index has fallen below the 104.00 level to trade at its lowest level since February 16, around 103.65, recording a 0.95% daily loss. Investors' focus now shifts to U.S. consumer inflation data on Tuesday as President Joe Biden attempts to calm down banking system fears. Still, the banking crisis could offset macroeconomic data ahead of the Fed's meeting. Investors are cutting down expectations of a 50 bps rate hike at the March 21-22 meeting. Against this backdrop, the U.S. bond yield plummeted across the curve on Monday, as the 10-year yield is trading at 3.47%, down by nearly 6%. The 2- and 5-year bond rates stand at 4.17% (-9%) and 3.69% (-6.8%), respectively. The market's pace will likely continue to be driven by risk flows and investors' expectations on how the Fed will respond. FOMC officials must now weigh the trade-off between controlling inflation and lending some air to the financial system. From a technical perspective, according to indicators on the daily chart, the EUR/USD pair holds a slightly bullish short-term outlook. The RSI and MACD jumped to positive territory, and the pair now trades above its main moving averages. On the upside, the following resistance levels line up around 1.0740 and at the 1.0800 level ahead of the more relevant 1.0900 zone, which is the 50% retracement of the 1.2266-0.9535 decline. On the downside, supports are seen at the 20-day SMA at 1.0630, followed by the 1.0600 psychological mark and the 1.0540 zone (100-day SMA).
by Alex_Boltyan_FXAnalyst
Euro hits 1-month high as Silicon Valley Bank collapse weighs onThe euro has posted sharp gains at the start of the week, extending its rally against a retreating US dollar. In the North American session, EUR/USD is trading at 1.0740, up 0.95% and its highest level since February 15. Perhaps it is fitting that today's economic calendar has no US or European releases, allowing investors to focus their full attention on the fallout from the collapse of the Silicon Valley Bank (SVB). This is the largest US bank to fail since 2008 and understandably, investors are alarmed that the contagion could spread and the US banking system could be at risk. Over the weekend, New York officials closed Signature Bank, one of the main banks in the cryptocurrency sector. The US government acted decisively and said SVB depositors (but not investors) would be protected and President Biden made a television appearance to reassure a nervous public that the banking sector is safe and those responsible for the SVB collapse would be held accountable. The fact that Biden had to address the nation reflects fears that the SVB failure could trigger a full-blown banking crisis. The SVB collapse has sent the US dollar in retreat against the majors, as the market expectations of a 50-bp hike from the Fed next week have evaporated. Just last week, the markets had priced a 50-bp hike at 70% and a 25-bp increase at 30%. That has shifted to a 70% likelihood of a 25-bp increase and a 30% chance of the Fed taking a pause, with a zero chance of a 50-bp hike. Goldman Sachs had projected a 25-bp last week but now expects the Fed to pause. The US releases CPI on Tuesday and the release was expected to play a key role in the Fed rate decision, but that was before the SVB collapse triggered a massive repricing in the markets. Still, the inflation report will be widely watched by investors and by the Fed. Headline inflation is expected to fall to 6.0% in February, after a 6.4% gain in January. EUR/USD is testing resistance at 1.0718. The next resistance level is 1.0798 There is support at 1.0622 and 1.0542
by OANDA
The current context is serious | Forex-Indices-Stocks-Crypto |It seems that inflation is considered the devil for the markets, so the focus will be on the next Fed meeting scheduled for March 22nd. Last week we saw a strong increase in NFP and this could be the first sign of a hawkish FED, but this week we will see the second and final sign for the markets: CPI release. These two drivers will complete the big economic figure ahead of the interest rate announcement. In recent weeks Governor J.P has been under a lot of pressure from the financial community (including Janet Yellen, Treasury Secretary and former Fed Governor) due to the large risk of contraction and the impact of such aggressive monetary policy. But perhaps the news about failure of some banks could prove to be a strong ally of Powell. Why am I saying that? If the Fed's target is to drag the US economy into a mild recession to try and get inflation back to around 2 percent, concern that these two failures could be contagious within the banking sector could help Powell achieve the first target: "bring down inflation...". Even the geopolitical context should not be underestimated: The war in Ukraine and China-United States tensions over Taiwan. We will see the impact on the main markets (dollar, SP500, gold...) in the second part of this analysis.
by TheAnonymousBanker
5
EURUSD Potential Forecast | 13th March 2023Fundamental Backdrop 1. NFP print came out 311k vs 224k forecasted. 2. Average hourly earnings m/m printed 0.2% compared to 0.3% forecasted. 3. Unemployment rate came out at 3.6% vs 3.4% forecasted. 4. Resulted in heavy bearish USD sentiments due to the wage inflation decreasing and unemployment rate increasing. 5. This shows the effects of rate hikes by the Fed and hence sentiments believe that the Fed now has lesser incentive to hike by 50bps in the upcoming FOMC. 6. All eyes will now be on CPI release this week and if CPI drops, we could see further downside pressure on the DXY. 7. On the EURO side of things, if Fed were to hike by 25bps in the next FOMC meeting, we can see a clear interest rate differential between EUR and the USD, giving more room for EURUSD appreciation. Technical Confluences 1. Strong bullish momentum coming in from EURUSD. 2. Price has broken the H4 resistance (now support) at 1.06912. 3. Price is resting well above the ichimoku cloud as well, showing the strong bullish intent. Idea Price can potentially come lower to tap into the key support level at 1.069. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
Long
by OlympusLab
DXY Potential Forecast | Post NFP | 13th March 2023Fundamental Backdrop 1. NFP print came out 311k vs 224k forecasted. 2. Average hourly earnings m/m printed 0.2% compared to 0.3% forecasted. 3. Unemployment rate came out at 3.6% vs 3.4% forecasted. 4. Resulted in heavy bearish USD sentiments due to the wage inflation decreasing and unemployment rate increasing. 5. This shows the effects of rate hikes by the Fed and hence sentiments believe that the Fed now has lesser incentive to hike by 50bps in the upcoming FOMC. 6. All eyes will now be on CPI release this week and if CPI drops, we could see further downside pressure on the DXY. Technical Confluences 1. Price reacted from a H4 resistance zone at 104.6 and has since went lower. 2. Very strong bearish pressure from Monday's asian open. 3. Price action has shifted market structure to bearish. 4. Would be appropriate to look for short positions on the USD. Idea Price can potentially come lower to tap into the key support level at 102.65. NOT FINANCIAL ADVICE DISCLAIMER The trading related ideas posted by OlympusLabs are for educational and informational purposes only and should not be considered as financial advice. Trading in financial markets involves a high degree of risk, and individuals should carefully consider their investment objectives, financial situation, and risk tolerance before making any trading decisions based on our ideas. We are not a licensed financial advisor or professional, and the information we are providing is based on our personal experience and research. We make no guarantees or promises regarding the accuracy, completeness, or reliability of the information provided, and users should do their own research and analysis before making any trades. Users should be aware that trading involves significant risk, and there is no guarantee of profit. Any trading strategy may result in losses, and individuals should be prepared to accept those risks. OlympusLabs and its affiliates are not responsible for any losses or damages that may result from the use of our trading related ideas or the information provided on our platform. Users should seek the advice of a licensed financial advisor or professional if they have any doubts or concerns about their investment strategies.
TVC:DXYShort
by OlympusLab