EUR/USD continues to oscillate above 1.0700 as investors prepare for Fed policy


  • EUR/USD is displaying a sideways auction around 1.0720 as investors await Fed policy for fresh guidance.
  • Federal Reserve could remain shy of hiking rates further to tame the consequences of the banking sector debacle.
  • European Central Bank is likely to remain stick to bigger rates spell as inflation would remain higher for a longer period.
  • EUR/USD is marching towards the potential resistance plotted from March around 1.0740.

EUR/USD is continuously juggling in a narrow range above the round-level support of 1.0700 in the Asian session. It seems that investors have been sidelined ahead of the interest rate decision by the Federal Reserve (Fed). Therefore, the major currency pair is mimicking the pre-Fed policy period and is likely to continue its sideways performance.

S&P500 futures are adding further gains, carry forwarding the recovery performance on Monday as investors cheered liquidity assistance from various financial institutions to First Republic Bank after solvency issues. It seems that investors are showing maturity in efforts made for easing financial instability, portraying a recovery in the risk appetite theme.

The US Dollar Index (DXY) is also demonstrating a lackluster performance around 103.30 as the street looks confused about the Federal Reserve’s monetary policy. The commentary has come from Futuristic carmaker Elon Musk that the Federal Reserve should cut interest rates by at least 50 basis points (bps). The rationale behind the commentary could be an expected recession due to sheer policy tightening.

Meanwhile, demand for US government bonds still looks weak as the return offered looks solid at higher levels. The 10-year US Treasury yields have been recorded at 3.5%, at the time of writing. Yields have been supported after the promise of a liquidity influx of $30 billion by various financial institutions to support the First Republic Bank.

Investors look ambiguous over Fed policy

Inflation in the United States is still stubborn despite the case of the declining trend for the past few months. Therefore, the Federal Reserve (Fed) is expected to continue its policy-tightening cycle to bring down inflationary pressures to the desired levels. However, fresh evidence of banking sector shakedown has alarmed that the United States economy could face a deep recession. Higher inflationary pressures would join hands with the banking sector fiasco, which would impact the scales of economic activities dramatically.

Apart from the interest rate policy, Federal Reserve chair Jerome Powell would also deliver the dot plot plan, a roadmap dictating further rate hikes to achieve price stability. The Federal Reserve is still sticking to its prior terminal rate projection of around 5.25%, therefore, no surprises are expected for the interest rate guidance.

ECB Lagarde escalates fears of higher inflation projections

The Euro remained extremely active on Monday amid the commentary from European Central Bank (ECB) President Christine Lagarde. European Central Bank Lagarde confirmed that Eurozone inflation would remain higher for a longer period and shifted the blame to rising wage pressures. She reiterated that wage pressures have strengthened on the back of robust labor markets and added that employees are aiming to recoup some of the purchasing power.

Upward guidance on Eurozone inflation has strengthened the case for the continuation of bigger rates from the European Central Bank. Investors should be aware that the European Central Bank hiked its interest rates by 50 bps to 3.5% last week despite the demise of Credit Suisse.

Apart from that, investors were curious about the exposure of Eurozone banks to the Credit Suisse debacle. On which, European Central Bank Lagarde claimed that Eurozone banks' exposure to Credit Suisse was in Euro millions, not billions, per Reuters.

EUR/USD technical outlook

EUR/USD has displayed sheer strength after a Triple Bottom formation on an hourly scale. A Triple Bottom is a bullish reversal chart pattern that indicates an absence of selling pressure in the major currency pair while testing previous lows. The shared currency pair is marching towards the potential resistance plotted from March 15 high at 1.0740.

Upward-sloping 20-and 50-period Exponential Moving Averages (EMAs) at 1.0710 and 1.0687 respectively add to the upside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the bullish range of 60.00-80.00, which indicates that the upside momentum is active.

EUR/USD

Overview
Today last price 1.0718
Today Daily Change -0.0002
Today Daily Change % -0.02
Today daily open 1.072
 
Trends
Daily SMA20 1.0626
Daily SMA50 1.0728
Daily SMA100 1.0577
Daily SMA200 1.0327
 
Levels
Previous Daily High 1.0731
Previous Daily Low 1.0631
Previous Weekly High 1.076
Previous Weekly Low 1.0516
Previous Monthly High 1.1033
Previous Monthly Low 1.0533
Daily Fibonacci 38.2% 1.0693
Daily Fibonacci 61.8% 1.0669
Daily Pivot Point S1 1.0658
Daily Pivot Point S2 1.0595
Daily Pivot Point S3 1.0558
Daily Pivot Point R1 1.0757
Daily Pivot Point R2 1.0794
Daily Pivot Point R3 1.0857

 

 

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD clings to modest gains above 1.0650 ahead of US data

EUR/USD clings to modest gains above 1.0650 ahead of US data

EUR/USD trades modestly higher on the day above 1.0650 in the early American session on Tuesday. The upbeat PMI reports from the Eurozone and Germany support the Euro as market focus shift to US PMI data.

EUR/USD News

GBP/USD extends rebound, tests 1.2400

GBP/USD extends rebound, tests 1.2400

GBP/USD preserves its recovery momentum and trades near 1.2400 in the second half of the day on Tuesday. The data from the UK showed that the private sector continued to grow at an accelerating pace in April, helping Pound Sterling gather strength against its rivals.

GBP/USD News

Gold flirts with $2,300 amid receding safe-haven demand

Gold flirts with $2,300 amid receding safe-haven demand

Gold (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark in the European session. Eyes on US PMI data. 

Gold News

Here’s why Ondo price hit new ATH amid bearish market outlook Premium

Here’s why Ondo price hit new ATH amid bearish market outlook

Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.

Read more

US S&P Global PMIs Preview: Economic expansion set to keep momentum in April

US S&P Global PMIs Preview: Economic expansion set to keep momentum in April

S&P Global Manufacturing PMI and Services PMI are both expected to come in at 52 in April’s flash estimate, highlighting an ongoing expansion in the private sector’s economic activity.

Read more

Forex MAJORS

Cryptocurrencies

Signatures