#USDJPY @ 132.181 bulls cheer as UBS set to take over Credit Suisse. (Pivot Orderbook analysis)

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• USD/JPY bulls cheer as UBS set to take over Credit Suisse.
• Global central banks unite to offer liquidity via US Dollar swap lines.
• Two major banks in Europe are examining scenarios of contagion.

The pair currently trades last at 132.181.

The previous day high was 133.77 while the previous day low was 131.56. The daily 38.2% Fib levels comes at 132.4, expected to provide resistance. Similarly, the daily 61.8% fib level is at 132.92, expected to provide resistance.

USD/JPY looks to consolidate just above the 131.50 mark amid a jittery environment fueled by the Credit Suisse fallout during the weekend. Finally, Credit Suisse is going to be taken over by UBS as the Swiss authorities persuaded the latter on Sunday to make a bid for a takeover.

The news came just after some of the world’s top central banks started to offer daily loans in US dollars to their banks to reduce any stress in the financial system.

In this globally coordinated response, the Federal Reserve (Fed) has also stepped in along with the Bank of Canada (BoC), Bank of Japan (BoJ), Swiss National Bank (SNB), and the European Central Bank (ECB).

The liquidity injection will be done through swap lines, where central banks can offer US Dollar operations with seven-day maturity. The emergency swap line was first introduced during the COVID pandemic to ease US Dollar availability.

Prior to this joint effort, the Fed had already opened the discount window for commercial banks, and the banks have borrowed nearly $164 billion amid this liquidity crisis. As a result, we have seen a slight spike in the Fed balance sheet despite the ongoing Quantitative Tightening (QT) program. One can attribute this as a mini version of QE, which is contrary to the ongoing QT. We have seen the same scenario with the BoE a while ago during the pension fund crisis.

It seems contagion in the global banking sectors is not looking to be tamed yet, citing some Reuters reports. At least two major banks in Europe are examining scenarios of contagion in the region’s banking sector and are looking to the Federal Reserve and the ECB for stronger signals of support.

It’s important to note how the Fed will address this entire situation in their upcoming FOMC meeting this week and whether are they able to deliver the expected 25 basis point rate hike.

Technical Levels: Supports and Resistances

USDJPY currently trading at 132.17 at the time of writing. Pair opened at 131.84 and is trading with a change of 0.25 % .

The pair remains strongly bearish on the daily time frame. It trades below the 20 SMA @ 135.2, 50 SMA 132.54, 100 SMA @ 135.28 and 200 SMA @ 137.48.

The previous day high was 133.77 while the previous day low was 131.56. The daily 38.2% Fib levels comes at 132.4, expected to provide resistance. Similarly, the daily 61.8% fib level is at 132.92, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 131.01, 130.18, 128.8
• Pivot resistance is noted at 133.22, 134.6, 135.43

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