Despite the collapse of three US banks and attempts to rescue others, the stock market continues to fall which, in turn, has led to much lower bond yields. The bet on monetary tightening by the Federal Reserve has now receded, while warnings of a recession have intensified.

Nevertheless, investors remain optimistic as majority of respondents to an MLIV survey believe that a hard landing will be avoided, with around two-thirds predicting that the economy is heading for either a soft landing or a slight slowdown. Most are leaning towards a scenario in which the Fed raises rates a few more times to get inflation back on target before taking a softer stance.

The survey results also suggest that the observed banking problems, which were partly resolved last week, could come to the fore again. Thus, it was not surprising that the Bank of Canada, Bank of England, Bank of Japan, European Central Bank, Federal Reserve and Swiss National Bank have announced today a coordinated action to expand liquidity provision via US dollar liquidity lines. In order to enhance the efficiency of swap lines in the provision of US dollar funding, the central banks agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily transactions will start today, March 20, and will continue until at least the end of April.

Euro and the pound had no reaction to the news, while gold continued its upward trend.

Today, bulls have all chances to return to the March highs as long as the quote holds above 1.0635. That will certainly allow EUR/USD to go beyond 1.0665, heading towards 1.0630. In case of a decline below 1.0635, the pair will go to 1.0595, or to 1.055.

In GBP/USD, bulls are ready to keep storming the monthly highs, but they have to stay above 1.2160 and break through 1.2220 to maintain the momentum. Doing so will push the pair to 1.2265 and 1.2320, while a decline under 1.2160 and 1.2125 will lead to a collapse to 1.2075 and 1.2030.