Forex Today: Markets Cautious to Start Fed Week

This is what you need to know to trade today monday march 20:

Financial markets have entered the new week cautiously despite the encouraging news over the weekend regarding global liquidity problems. Eurostat will publish the data for the trade balance for january later in the session and the German Bundesbank will report its monthly report. The President of the European Central Bank (ECB), Christine Lagarde will testify before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament in Brussels at 14:00 GMT.

Late on Sunday, Swiss authorities convinced UBS Group AG to buy Credit Suisse Group AG in the next step to try to stop the spread of the banking crisis. According to news, UBS will pay $3.23bn for Credit Suisse and take up to $5.4bn in losses in a deal expected to close by the end of 2023.

Meanwhile, The Federal Reserve (Fed) announced that it will offer daily swaps to the Bank of Canada (BoC), the Bank of Japan (BoJ), the Swiss National Bank (SNB) and the European Central Bank (ECB) to ensure they have sufficient liquidity to continue operating. “The network of swap lines between these central banks is a set of available standing facilities and serves as an important liquidity backstop to ease stress in global funding markets,” the Fed said in a statement published on Sunday.

Despite these advances, US stock index futures are losing between 0.7% and 1% on the day. The 10-year US Treasury yield is down more than 3% on the day to 3.3%, and the DXY Dollar Index is trading slightly lower, below 104.00.

Although the pair EUR/USD opened gapping higher and broke above 1.0700 to start the week, lost traction and fell back towards 1.0650 early European morning. Data from Germany have revealed that the Producer Price Index (IPP) fell 0.3% monthly in Februaryafter the decrease of 1.2% in January.

He GBP/USD has reached its highest level since mid-February above 1.2220 during the Asian session on Monday. However, the pair has reversed direction and dipped below 1.2200, reversing most of its daily gains in the process.

After Friday’s impressive rise, the price of gold continues to rise early Monday amid falling global yields. At the time of writing, XAU/USD is trading at its highest level since Aprilslightly above $1,990.

With the Japanese yen benefiting from the bad mood in the markets, the USD/JPY it has come under downward pressure and is now trading in negative territory around 131.00.

He Bitcoin extended its rally over the weekend and advanced above $28,000 for the first time since June. As of early Monday, BTC/USD is undergoing a downward correction and is down 1% on the day, reaching $27,800. Despite having struggled to find direction over the weekend, the Ethereum gained more than 10% last week. ETH/USD is relatively calm early Monday and is hovering around $1,770.