NZD/CHF pulled back to a key inflection point right after the SNB raised its interest rates!
Will the pair see new intraweek highs today?
Before moving on, ICYMI, yesterday’s watchlist looked at NZD/JPY approaching a falling wedge resistance ahead of the FOMC event. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
EIA: crude oil inventories rose by 1.117M barrels from the previous week vs. 1.565M-barrel drawdown expected. Gasoline and distillate stockpiles showed deep drawdowns.
ECB President Lagarde reinforced the central bank’s hawkish plans, saying that the “rate path is data-dependent,” but stressed that “bringing inflation back to 2% over the medium term is non-negotiable.”
FOMC event takeaways:
- As expected, the Fed raised its interest rates by 25 basis points to the 4.75% – 5.00% target range
- Dot plot median forecast hinted at one more rate hike and NO rate cuts in 2023
- Revised economic projections showed higher inflation (3.5% to 3.6%) and lower GDP (0.5% to 0.4%) and unemployment rate (4.6% to 4.5%) for 2023
- Powell: rate hike paused was considered in the days running up to the meeting
- Powell: “We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.”
- Powell: U.S. banking system is “sound and resilient”
- Powell: Credit tightening likely, could “substitute” for rate hikes
ECB President Lagarde reinforced the central bank’s hawkish plans, saying that the “rate path is data-dependent,” but stressed that “bringing inflation back to 2% over the medium term is non-negotiable.”Coinbase received a Wells Notice formally declaring SEC’s plans to bring an enforcement action over “aspects of the Company’s spot market, staking service Coinbase Earn, Coinbase Prime and Coinbase Wallet.
SEC charges Tron founder Justin Sun, celebrities Lindsay Lohan, Jake Paul with crypto violations
U.S. Treasury Secretary Janet Yellen shared that she has “not considered or discussed anything having to do with blanket insurance or guarantees of deposits,” at least without Congressional approval.
Reuters Tankan survey showed large Japanese manufacturers remaining pessimistic for a third month in a row in March
Swiss National Bank (SNB) raised its interest rates by 50 bps to 1.5%, doesn’t rule out further rate hikes or currency interventions.
SNB: subdued demand from abroad likely t o keep growth modest for the rest of the year
Price Action News
The Fed raising it interest rates by “only” 25 basis points and shifting its tightening bias from “ongoing rate increases will be appropriate” to “some additional policy firming may be appropriate” translated to “dovish rate hike” during the U.S. session.
USD dropped sharply across the board though it only retained its weakness against its fellow safe-havens before the end of the day.
Asian session traders ran with the pro-risk, anti-USD theme and dragged the dollar to new intraweek lows.
European sessions don’t look like they’re buying it, though, as USD is gaining ground again since the start of the trading session.
Upcoming Potential Catalysts on the Economic Calendar:
BOE’s monetary policy decision at 12:00 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. new home sales at 2:00 pm GMT
Eurozone consumer confidence at 3:00 pm GMT
AU flash manufacturing and services PMIs at 10:00 pm GMT
Japan’s national core CPI at 11:30 pm GMT
Japan’s flash manufacturing PMI at 12:30 am GMT (Mar 24)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
Just as markets were pricing in a risk-friendly trading environment, the Swiss National Bank (SNB) raised its interest rates by 50 basis points when other major central banks were down to 25bps.
The central bank also didn’t rule out further rate hikes or currency interventions even as it expects a “subdued” global economic recovery and “modest” domestic economic growth for the rest of the year.NZD/CHF, which just broke above the .5750 psychological handle, pulled back to yesterday’s highs.
Coincidentally, NZD/CHF’s current levels line up with the R1 of the 15-minute chart’s Standard Pivot Point and the 38.2% Fibonacci retracement level of today’s upswing.
How high can NZD/CHF fly?
A bounce from NZD/CHF’s current levels could take the pair to the area of interest near the pivot point’s R2 (.5780) levels.
But keep in mind that the pair encountered an intraday resistance right around its full ATR move (60 pips).
If NZD/CHF bulls can’t sustain a bullish momentum, then NZD/CHF could remain near its current levels before finding its next direction.