Moody’s bank downgrades pushes FXCM’s US.BANKS basket down to daily support

  • US.banks

Moody's has decreased the credit ratings of numerous smaller and medium-sized banks within the United States. The agency also indicated the possibility of future downgrades for some of the country's largest financial institutions. This move comes as a cautionary measure, as Moody's expressed concerns about the potential challenges that the banking sector might face due to funding vulnerabilities and a decrease in overall profitability.

The ratings agency downgraded the credit ratings of ten banks by a single notch. Additionally, it has initiated a review process for potential credit downgrades for six major banking entities. Among these are prominent institutions such as Bank of New York Mellon, US Bancorp, State Street, and Truist Financial.

Moody's said that "Many banks' Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital" as a "mild recession looms and asset quality looks set to decline."

It also maintained that "Asset risk is rising, in particular for small and mid-size banks with large [commercial real estate] exposures."

Trade the News: View our Economic Calendar


In response, FXCM's US.BANKS basket shows some sings of weakness. It daily EMAs have crossed negatively (black circle) and the RSI has dipped below 50 (blue rectangle). Nevertheless, price has found support at 2,900 (red shaded horizontal).

If the EMAs and RSI remain bearish, the support level will struggle to hold. However, given that the longer term trend is looking more resilient it may prove to be a level that is regarded as "cheap" and pull the bulls in from the sidelines

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.

${} / ${getInstrumentData.ticker} /

Exchange: ${}

${} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.