EUR/USD Current Price: 1.0688
- The collapse of the Silicon Valley Bank behind financial turmoil on Monday.
- Data-packed week will have central banks’ decisions under scrutiny.
- EUR/USD is technically bullish, needs to clear a critical resistance level at 1.0745.
The EUR/USD pair extended last week’s rally to 1.0736 on Monday but retreated from the level mid-European session, now trading around the 1.0690 level. The US Dollar fell following the release of the United States Nonfarm Payrolls (NFP) report last Friday and news that the Silicon Valley Bank (SVB) collapsed. Both are directly linked to the US Federal Reserve (Fed) and the monetary policies adopted due to the coronavirus pandemic. Massive liquidity in the first year was followed by aggressive tightening in early 2022, with the US interest rate benchmark jumping from 0% to 5% in less than a year.
Government bonds lost value, and borrowing costs increased, causing a capital crisis to SVB, which announced last Wednesday a plan to raise $2 billion. As a result, banks’ stocks entered a sell-off spiral that continues this week, spreading like wildfire to their overseas counterparts. US authorities launched emergency measures on Sunday to avoid collateral damage in the banking system, while President Joe Biden addressed the nation on the matter ahead of Wall Street’s opening. Financial markets are now reassessing Federal Reserve’s future monetary policy decisions as the banking crisis has become a new and relevant factor.
Data-wise, the day will be quiet, although the week will be pretty busy. The United States will publish the February Consumer Price Index (CPI) on Tuesday, while the European Central Bank (ECB) will have a monetary policy meeting on Thursday. Other relevant figures will be out throughout the week, including US Retail Sales and the Producer Price Index (PPI).
EUR/USD short-term technical outlook
The EUR/USD pair gapped higher at the weekly opening but filled the gap during London trading hours. It currently holds on to modest gains compared to Friday’s close. Technical readings in the daily chart support a bullish continuation, although the pair topped around a critical resistance level, 1.0745, the 61.8% Fibonacci retracement of the 2022 yearly slump. Still, EUR/USD is currently developing above a flat 20 Simple Moving Average (SMA), while the 100 SMA heads firmly north below it. Additionally, technical indicators picked up bullish momentum and are crossing their midlines into positive territory.
In the near term, and according to the 4-hour chart, buyers seem to be losing steam. The pair briefly traded above a mildly bearish 200 SMA but is back below it. The 20 SMA maintains its upward slope, providing dynamic support at around 1.0600. Finally, technical indicators retreat from overbought territory, still holding well above their midlines.
Support levels: 1.0650 1.0600 1.0565
Resistance levels: 1.0700 1.0745 1.0790
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
Editors’ Picks
EUR/USD recovers from two-year lows, stays below 1.0450
EUR/USD recovers modestly and trades above 1.0400 after setting a two-year low below 1.0350 following the disappointing PMI data from Germany and the Eurozone on Friday. Market focus shifts to November PMI data releases from the US.
GBP/USD falls to six-month lows below 1.2550, eyes on US PMI
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2550 on Friday. Disappointing PMI data from the UK weigh on Pound Sterling as investors await US PMI data releases.
Gold price refreshes two-week high, looks to build on momentum beyond $2,700 mark
Gold price hits a fresh two-week top during the first half of the European session on Friday, with bulls now looking to build on the momentum further beyond the $2,700 mark. This marks the fifth successive day of a positive move and is fueled by the global flight to safety amid persistent geopolitical tensions stemming from the intensifying Russia-Ukraine war.
S&P Global PMIs set to signal US economy continued to expand in November
The S&P Global preliminary PMIs for November are likely to show little variation from the October final readings. Markets are undecided on whether the Federal Reserve will lower the policy rate again in December.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.