EUR/USD, EUR/GBP and USD/JPY mull over SVB collapse fallout
Outlook on EUR/USD, EUR/GBP and USD/JPY amid the collapse of Silicon Valley Bank and regulators stepping in to quash any further systemic risk.
EUR/USD rises for its third consecutive day following SVB collapse
EUR/USD rises for its third straight session as the US dollar slides amid investors mulling over the prospect of further systemic risk following the collapse of Silicon Valley Bank (SVB) last week, despite the US regulators providing a new lending programme for institutional investors and a $250 000 protection for depositors in order to reassure the financial markets. Share and bond holders will have to take their losses, though.
EUR/USD is now trading in one-month highs, having last week not only broken through the February-to-March downtrend line at $1.0638 but also risen above its last reaction high at $1.0694, confirming at least an interim bottoming formation. The December peak at $1.0736 and mid-January low at $1.0766 are now in focus, a rise above which will have the mid-February high at $1.0804 in its sights. Slips should find support between Monday’s intraday low at $1.0664 and the breached one-month downtrend line, now because of inverse polarity, support line, at $1.0638.
EUR/GBP bounces off minor support
EUR/GBP’s tumble from last week’s high at £0.8925, made near the £0.8928 mid-February high, took it back down towards Friday’s low at £0.8821 before it recovered from the 55-day simple moving average (SMA) at £0.8841 on Monday morning ahead of a speech by momentary committee policy (MPC) member, Dhingra, and Tuesday’s UK unemployment data for January.
The cross has been oscillating around the 55-day SMA for the past couple of weeks and range trading since the beginning of the year with it being expected to continue to evolve within its recent boundaries between £0.8925 and £0.8755. Short-term minor resistance around the £0.8869 mid-February low may be reached above which further resistance sits at the £0.8896 early-March high while support below the 55-day SMA at £0.8841 can be found at Friday’s £0.8821 low and the £0.8804 mid-February low.
USD/JPY resumes its long-term descent
USD/JPY’s advance to last week’s near three-month high at ¥137.91 on diverging monetary policies between the US and Japan seems to have come to an end with the cross failing around the 200-day SMA at ¥137.48 and then sliding through its February-to-March uptrend line at ¥135.90 which may point to the resumption of its long-term downtrend.
A fall through Monday’s ¥133.69 intraday low would push the early February high ¥132.91 and the 55-day SMA at ¥132.46 to the fore. Minor resistance can be encountered at the 1 and 6 March lows at ¥135.26 to ¥135.36 as well as along the breached uptrend line, now resistance line, at ¥135.90.
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