U.S. Dollar Extends Decline As Bank Crisis Eases

The U.S. dollar extended its early decline against other major currencies in the Asian session on Tuesday, as fears of a global banking crisis once again eased following the latest developments in the sector and after three regional U.S. Fed bank presidents said the U.S. banking system was not facing a liquidity crisis.

News that First Citizens BancShares Inc. will buy all deposits and loans of Silicon Valley Bridge Bank, and the U.S. Financial Stability Oversight Council's remarks that the U.S. banking system was "sound and resilient" despite stress on some institutions, lifted sentiment in global markets.

Oil prices jumped nearly 5 percent overnight, to record their biggest gains in months amid Russia's threat to station nuclear weapons in Belarus and the shutdown of the Iraq-Turkey pipeline at the request of the Turkish government.

The Fed's dovish commentary, the mild 25-basis points rate hike as well as hints that rate hikes were nearing an end, resulted in the Dollar weakening against major currencies over the course of the past week.

The U.S. dollar started declining from the New York session on Monday.

In the Asian session, the U.S. dollar fell to a 4-day low of 1.0819 against the euro, from yesterday's closing value of 1.0797. On the downside, the greenback is likely to find its support around the 1.10 level.

Against the pound and the Swiss franc, the greenback dropped to 5-day lows of 1.2320 and 0.9137 from yesterday's closing quotes of 1.2286 and 0.9154, respectively. If the greenback extends its downtrend, it is likely to find support around 1.24 against the pound and 0.90 against the franc.

The U.S. dollar edged down to 130.56 against the yen, from yesterday's closing value of 131.53. The greenback is likely to find support around the 128.00 area.

Against the Australia and New Zealand dollars, the greenback slipped to 4-day lows of 0.6693 and 0.6234 from yesterday's closing quotes of 0.6649 and 0.6196, respectively. The next support level for the greenback is seen around 0.68 against the aussie and 0.64 against the kiwi.

The greenback depreciated to a 5-day low of 1.3634 against the Canadian dollar, from yesterday's closing value of 1.3660. The USD/CAD pair may find its support level around the 1.34 area.

Looking ahead, ECB Board member Andrea Enria is scheduled to speak on "How is the European Banking Supervision process changing?" at 22nd Handelsblatt Annual Conference on Banking Supervision in Frankfurt, Germany at 4:35 am ET.

At 4:45 am ET, Andrew Bailey, Governor of the Bank of England, alongwith other officials is set to participate in a Treasury Select Committee hearing on Silicon Valley Bank, in London, U.K.

In the New York session, U.S. goods trade balance for February, consumer confidence for March, U.S. S&P/Case-Shiller home price for January, U.S. Dallas Fed services index for March and U.S. Richmond Fed manufacturing index for Marchare due.

At 10:00 am ET, U.S. Federal Reserve Vice Chair for Supervision Michael Barr is scheduled to testify on "Bank Supervision" before the House Financial Services Committee, at Washington DC, U.S.

US Dollar vs Yen (FX:USDJPY)
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