Dollar falls further on fresh crisis over SVB collapse; US inflation data in focus
The dollar came under increased pressure and opened with gap-lower on Monday, hitting one-month low against the basket of major world currencies.
Already weak dollar’s sentiment was soured further by the sudden collapse of Silicon Valley Bank.
The government launched a set of measures to prevent stronger damage in the banking system.
The US authorities assured customers that they will have access to all their deposits, but the US Finance Minister Janet Yellen said that there will be no bailout and the finance ministry will not cover the losses of the bank, stressing that they are not going to repeat the same mistake like in 2008, when the administration of the President Obama financially supported collapsed banks.
Due to current circumstances, investors lowered their bets for Fed rate hike from 50 to 25 basis points in the policy meeting next week, although the US central bank will remain primarily focused on high inflation, which hasn’t showed significant signs of easing so far.
All eyes are on Tuesday’s US February inflation report, which is expected to give more clues about Fed’s next steps, while the fresh crisis over collapse of SVB is expected to boost volatility in the market.
Technical studies are turning to full bearish configuration on daily chart, as descending 14-d momentum broke into negative territory, RSI is heading south and the price fell below moving averages.
Fresh weakness marked nearly 50% retracement of 100.66/105.85 upleg and broke into daily Ichimoku cloud (spanned between 103.89 and 102.64).
Break of 50% retracement (103.26), where bears found temporary footstep, will expose strong support at 102.64 (daily cloud base / Fibo 61.8%), loss of which would confirm reversal and open way for further weakness.
Today’s close below 103.89 (cloud top / broken Fibo 38.2%) is needed to keep bears intact.
Res: 103.89; 104.38; 104.63; 105.06
Sup: 103.26; 102.64; 101.88; 100.66