Fed Backstop Fears Could Threaten Dollar, Deutsche Bank Says

GBPUSD technicals

The GBPUSD has been in a steady uptrend since bottoming at 1.20987 on January 13, a low that aligned closely with support levels from September and October 2024 (see red circle on the daily chart). Since then, the pair has continued to step higher, carving out a series of higher lows and higher highs.

In February, price action found support at a swing area between 1.22986 and 1.2335, reinforcing bullish intent. That momentum carried into March, with the pair moving back above the 200-day moving average, currently at 1.28028, and into a key swing zone that extends up to 1.28612. Notably, dips over the past two days have stalled just ahead of that upper swing area, signaling strong underlying support.

The pair is now trading at new session highs, reaching 1.2989, just shy of the March high of 1.30139, which also marks the highest level for the year. A break above that level would likely spark further bullish momentum.

Zooming into the hourly chart, early-day price action saw a bounce in GBPUSD following the Trump tariff news, which triggered a wave of buying. The initial move higher tested the 100-hour moving average near 1.2922 (blue line on the chart), where sellers initially leaned in. However, the downside was limited, and once the price broke above the 100-hour MA, bullish momentum carried it through the 200-hour MA as well.

That initial breakout, though, was short-lived, as the price chopped back and forth. The encouraging sign for buyers came when the pullback found support once again at the 100-hour MA, reinforcing its importance. That successful retest gave bulls the green light to resume the move higher, lifting the pair toward the 1.3000 psychological level.

The pair is now trading near key resistance at 1.30139, the high for March and the highest level for the year. A sustained break above that level would strengthen the bullish bias and open the door for further upside.

On the flip side, failure to break above 1.30139 would dent short-term bullish momentum. Still, it would take a drop back below the 200-hour MA at 1.2949 and especially the 100-hour MA at 1.2922 to shift the bias more definitively in favor of sellers.

Source: ForexLive

UK bonds retreated on Thursday, erasing the gains made after Wednesday’s announcement of a smaller-than-expected debt plan.

Investors quickly shifted their focus to the nation’s precarious fiscal position and the broader risks of rising global borrowing costs.

UK gilts under pressure as rising yields threaten Reeves’ fiscal buffer

Gilts declined across the curve, underperforming their European counterparts and pushing the benchmark 10-year yield up by as much as eight basis points to 4.81%—its highest level since mid-January when a global bond selloff severely impacted Chancellor Rachel Reeves’s fiscal flexibility.

Although Reeves yesterday restored her fiscal buffer to exactly where it was in October, firms including BlackRock Inc., Allspring Global Investments and Fidelity International say the UK bond market remains very much at the mercy of external forces.

Lauren van Biljon, senior portfolio manager at Allspring Global Investments, noted: “Reeves has very limited headroom, and potential domestic and international shocks are numerous.”

The concern is that rising global bond yields, persistent inflation, and weaker-than-expected growth could trigger another selloff in UK bonds, once again eroding Reeves’ fiscal buffer.

The Office for Budget Responsibility cautioned that this headroom could vanish entirely if U.S. President Donald Trump imposes 20% tariffs on global trade or if borrowing costs increase by just 0.6%.

UK fiscal woes cast a shadow over gilts ahead of autumn budget

Vikram Aggarwal, fixed-income investment manager at Jupiter Asset Management, said the deterioration in UK public finances can’t be underestimated. He noted that the cheapness of gilts doesn’t make them an attractive buy.

The fragile state of the UK’s finances is heightening expectations that the government may need to raise taxes or implement further spending cuts in October’s Autumn Budget. The Office for Budget Responsibility estimates a 46% chance that Reeves will breach her fiscal rule requiring taxes to cover day-to-day spending.

Shamil Gohil, fixed-income portfolio manager at Fidelity International, said that Gilts will probably remain in no man’s land until the Autumn budget. He added that they will likely see some fiscal slippage and buffer erosion.

UK bonds rally on borrowing plan, but fiscal risks loom large

Market movements have been erratic, with gilts experiencing sharp fluctuations driven by shifting investor sentiment.

On Wednesday, UK bonds posted one of their strongest performances of the year following the Debt Management Office’s announcement of a smaller-than-expected borrowing plan. Yields on 30-year notes dropped by as much as nine basis points—their biggest decline since early February.

Pooja Kumra, senior UK and European rates strategist at Toronto Dominion Bank, attributed Wednesday’s bond rally primarily to the favourable issuance figures. However, she emphasized that the underlying reality remains unchanged, with the UK still trapped in a difficult fiscal position.

Some funds, including Vanguard, took confidence from the government’s firm re-commitment to its fiscal rules, saying the relative cheapness of gilts outweighed the risks around the UK’s economic trajectory.

Ales Koutny, head of international rates at Vanguard, reinstated his long-dated gilts position against Germany. He noted that Reeves’ firm stance on fiscal rules being non-negotiable has helped ease concerns about shrinking fiscal headroom. He expects UK bonds to realign with U.S. yields in the coming months.

Markets have wavered for months in their approach to UK gilts, shifting between buying for their high yields and selling over fears that the Labour government may struggle to manage the nation’s deficit.

Vivek Paul, UK chief investment strategist at BlackRock, noted that the country’s borrowing costs remain highly vulnerable to spikes, suggesting gilts could face renewed pressure.

Source: CryptoSlate

Recent developments in the Bitcoin market reveal a significant increase in confidence, primarily driven by large-scale purchases from major investors, commonly referred to as whales. Although macroeconomic uncertainties and fluctuating technical indicators have cast a shadow over Bitcoin’s recent gains, the robust interest from institutional players could reshape market dynamics.

Whales Make Historic Purchases: $11.2 Billion Spent

Since March 11, whales have amassed over 129,000 Bitcoin, a move valued at about $11.2 billion, while prices averaged around $87,500. This surge in buying activity marks the highest accumulation since August 2024 and underscores the long-term confidence among major players in the cryptocurrency sector despite short-term instabilities.

According to on-chain analysis from Glassnode, this trend suggests a rising confidence among key market players. The significant buying by whales not only stabilizes prices but also plays a critical role in shaping market sentiment, effectively counterbalancing the selling pressures from smaller investors.

What Role Do Technical Indicators Play?

Bitcoin’s recent recovery, following a dip below $78,000, can be attributed to optimistic signals from the Federal Reserve and the anticipation of upcoming tightening tariff policies. These factors help to bolster short-term investor confidence as the market seeks to stabilize.

Glassnode reports indicate that wallets holding more than 10,000 BTC are mitigating the effects of smaller investors’ sell-offs, suggesting that long-term holding strategies remain intact. The rise in Bitcoin classified as “1Y+ HOLD,” which indicates coins that have not been moved for over a year, reflects a growing resilience among holders against transient price fluctuations.

The Crypto Daybook Americas suggests that this trend indicates a prevailing commitment to long-term strategies among significant market players. Even as the market remains susceptible to volatility, the sustained interest from whales signifies that long-term goals are being actively pursued.

Large investors made significant Bitcoin purchases totaling $11.2 billion. Accumulation levels are reminiscent of past bullish trends, indicating confidence.Despite market volatility, long-term holding strategies among major players remain strong. Optimism from the Federal Reserve and upcoming policy changes contribute to market recovery.

The ongoing activity among whales in the Bitcoin market highlights their crucial role in shaping market stability, as their confidence may pave the way for a more secure trading environment. Their strategic purchases not only affirm their belief in Bitcoin’s future potential but also help establish a counterbalance against prevailing selling pressures. This behavior could prove pivotal as the market navigates through its current challenges.

Source: CryptoSlate

Source: Theguardian

“This offers a reference to compare one's price prediction with the market's.”

BTC price targets on Polymarket. Source: Ashwin/X

The modest expectations for BTC/USD mimic those elsewhere. On fellow prediction site Kalshi, one average BTC price target stands at $122,000 — just $11,500 beyond current all-time highs.

BTC price odds (screenshot). Source: Kalshi

“Extremely important for the price not to breach the year-long average,” he told X followers on March 26.

BTC/USD chart. Source: Aksel Kibar/X

Source: Cointelegraph

An anticipated slowdown in the world economy in 2025 sparked by uncertainty around the impact of U.S. President Donald Trump’s tariff plans has taken away from the appeal of riskier assets like stocks, according to analysts at Barclays.

In a note to clients on Thursday, the brokerage said it now expects global growth to come in at just 2.9% this year, down from 3.3% in 2024.

"Global supply chains are about be upended, which means prices will rise, final demand will drop, and growth will slow," the analysts said.

A murky outlook around Trump’s proposals for sweeping tariffs on both friends and adversaries alike are seen denting the ability of businesses to plan for the future, the analysts said, adding that consumers are also likely to ratchet down spending to shield their finances from potential levy-induced headwinds.

Since returning to the White House in January, Trump has raised tariffs on China to up to 30% and placed a 25% duty on steel and aluminum. He has also threatened to roll out tariffs on a range of sectors and institute measures to match foreign tariffs on U.S. goods.

On Wednesday afternoon, Trump said he would place 25% tariffs on automotive imports into the U.S., making good on a pledge to penalize foreign manufacturers of cars and trucks. The action, along with what the White House has dubbed "reciprocal" tariffs, are set to take effect on April 3.

Trump has argued that the tariffs are necessary to offset lost revenues from proposed tax breaks and help bring industrial jobs back to the U.S.

"We do not expect all the tariff threats to come to fruition; the economic damage would be severe, including for the US, and there seem to be off-ramps in some cases," the Barclays analysts argued.

They said that although worldwide economic growth is projected to slow and is broadly "uninspiring," they do not expect it to slide into recession.

Against this backdrop, the strategists noted that that are "uneasy" about risk assets "for the first time in several quarters," adding that they now recommend core fixed income over equities.

"Just months into the new year, the world economy is staring down the barrel of the tariff gun –- and the results are unlikely to be pretty," the analysts wrote.

Source: Investing