On the daily chart below, we can see that the price has rallied above the broken neckline again. The movement was strong and quick because of the recent events and the repricing of interest rates expectations.
Last week, besides a higher unemployment rate and lower than expected wage gains in the NFP report, we saw the failure of the Silicon Valley Bank which spread fears of contagion and another banking crisis.
Given such developments, the market repriced lower interest rates expectations with rate cuts by the end of the year and at some point, there was even more probability of no hike at the March meeting.
This quick repricing pushed the USD lower across the board. The moving averages are also on the brink of crossing higher which would be a bad omen for the sellers.
On the 4 hour chart below, we can see that the price has come into a strong resistance at 0.6270 with the 38.2% Fibonacci retracement level of the entire move down since February. This is where the sellers will most likely lean on. Yesterday the US CPI report showed that inflation is still too high, but the data was in line with expectations across the board and therefore the market didn’t react in a big way.
The moving averages will act as support for the buyers with the last line of defence being the 0.6191 level where we have the confluence of the red long period moving average and the support level.
On the 1 hour chart below, we can see that there’s a possible double top at the 38.2% Fibonacci retracement level and the resistance at 0.6270. The divergence between the price and the MACD is also signalling a loss of buying momentum which should give the double top more chances of playing out.
The neckline would be the support at 0.6191 that we highlighted above as the last line of defence for the buyers. If the sellers manage to break that level, then we should see them again in control and get another selloff towards the 0.61 handle or lower.
