On the daily chart below, we can see that the buyers are trying hard to defend the 133 handle as depicted by the long candlesticks wicks.
The technicals and the fundamentals are working against the buyers at the moment though. The moving averages have crossed to the downside, which may be an early signal of a change in trend.
The Treasury yields keep falling as the market is expecting the Fed to stop its tightening cycle soon and deliver rate cuts earlier than expected.
The market will now look at the FOMC meeting next week and the economic data to decide if the trend is indeed downwards now or the market overreacted to the banking ”crisis”.
On the 4 hour chart below, we can see that the selling momentum is weakening as shown by the divergence between the price and the MACD right at the 133 support.
We have also the support from the 50 and 61.8% Fibonacci retracement levels of the entire upward move since the gamechanger February NFP report. The sellers may now try another push lower towards the 61.8% level expecting a dovish Fed.
On the 1 hour chart below, we can see that the price may be forming a falling wedge pattern. This is generally a reversal pattern, so the buyers will look for the price to break above the blue trendline to start piling in with more conviction.
We may get another push lower from the sellers as the Fed next week is expected to hike by just 25 bps instead of the 50 bps that the market was fearing just a week ago. If the Fed delivers a hawkish 25 bps hike or even surprises with a 50 bps move, then we may see a quick rally in the pair. Otherwise, the sellers will remain in control.
