AUD/USD soars to 0.6718 amid catastrophic SVB bank collapse

Daily price movements:

AUD/USD currency pair opens the first day of a new week at 0.6575, with an intraday high of 0.6718 and a low of 0.6577. The pair trades at 0.6716 at the press time, up by 2.11% on the day, just below Monday’s ATH price.

The recent issues with Silicon Valley Bank (SVB) and Signature Bank have highlighted the vulnerable state of US banks, which has dampened expectations for additional interest rate increases from the Federal Reserve (Fed). As a result, Goldman Sachs now predicts a delay in rate hikes in March, and the Fed Fund futures (*) have reduced the likelihood of a 0.50% increase in the Fed rate.

Consequently, the US Dollar Index (DXY) has fallen to its lowest level in a month, trading near 103.60 at the press time.

* Fed Fund futures directly reflect collective marketplace insight regarding the future course of the Federal Reserve’s monetary policy. (Source: CME Group’s website)

Key economic events:

Investors will be closely watching the US Consumer Price Index (CPI) (excluding Food and Energy) data for February, set to be released on Tuesday, to gain a better understanding of potential Federal Reserve (Fed) actions on the pace of interest rate increases, which could impact the strength of the US Dollar.

Additionally, both the Employment Change s.a. (Feb) and Unemployment Rate s.a. (Feb) released by the Australian Bureau of Statistics on Thursday will be the key economic events for AUD this week.

Technical view:

Technical indicators suggest a potential bullish outlook for the AUD/USD in the short term. The 20-day SMA and 50-day SMA are at 0.6777 and 0.6885, respectively, indicating a possible bullish trend. The daily 38.2% Fibonacci level is at 0.6593, with the 61.8% Fibonacci level at 0.6611. The RSI(14) is at 44.516, indicating potential bullish momentum. Resistance levels for AUD/USD are at 0.6623, 0.6670, and 0.6699, while support levels stand at 0.6547, 0.6517, and 0.6471. The daily pivot point is at 0.6594.