- EUR/USD prints three-day uptrend as firmer sentiment weighs on the US Dollar.
- US regulators’ efforts to tame financial markets risk from SVB, Signature Bank favor risk profile on Monday.
- Friday’s US employment data failed to impress US Dollar bulls as the previous risk-aversion drowned yields.
- US CPI, ECB eyed for clear directions, consumer-centric data also appear important to watch.
EUR/USD rise to the highest levels in three weeks as an upbeat risk profile favors bulls amid early Monday. That said, the Euro pair advances nearly half a percent on a day to 1.0715 as it prints a three-day winning streak at the highest levels in three weeks with eyes on Thursday’s European Central Bank (ECB) monetary policy meeting, as well as Tuesday’s US Consumer Price Index (CPI).
US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint actions to tame the risks emanating from the SVB and Signature Bank during the weekend. “All depositors of Silicon Valley Bank and Signature Bank will be fully protected,” said the authorities in a statement released afterward. While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.”
It should be noted that China’s dislike for the US interference in Taiwan matters and the better-than-expected US Nonfarm Payrolls (NFP) seem to probe the risk-on mood ahead of this week’s top-tier data/events.
On Friday, the US Nonfarm Payrolls (NFP) grew more than 205K expected to 311K in February, versus 504K (revised), while the Unemployment Rate rose to 3.6% for the said month compared to 3.4% expected and prior. Further, the Average Hourly Earnings rose on YoY but eased on monthly basis for February whereas the Labor Force Participation increased during the stated month. The data, however, failed to impress the US Dollar buyers as the market’s risk-off mood drowned the US Treasury bond yields and the greenback.
It’s worth observing that the market’s fears of no Fed rate hikes in March, due to the latest imbalance in the US banking sector due to the SVB and Signature Bank fallout, also seem to weigh n the US Dollar.
Amid these plays, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.0% around 3,905 by the press time whereas the US Treasury bond yields recover from the monthly low, after posting the biggest daily loss of the year 2023 on Friday.
Moving on, market plays may witness a sluggish session on Monday amid a cautious mood ahead of top-tier data/events. That said, the ECB is likely to announce a 0.50% rate hike and can join the latest risk-on mood to propel the EUR/USD price. Though, strong prints of the US consumer-centric data and inflation may renew hawkish Fed bias and can exert downside pressure on the major currency pair moving forward.
Technical analysis
The EUR/USD pair’s higher highs on price fail to gain support from the Relative Strength Index (RSI) 14 as it forms a lower high, which in turn suggests a lack of enough bullish momentum to cross the immediate key hurdle, namely the 200-SMA level surrounding 1.0710.
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
AUD/USD appreciates as US Dollar remains subdued after a softer inflation report
The Australian Dollar steadies following two days of gains on Monday as the US Dollar remains subdued following the Personal Consumption Expenditures Price Index data from the United States released on Friday.
USD/JPY consolidates around 156.50 area; bullish bias remains
USD/JPY holds steady around the mid-156.00s at the start of a new week and for now, seems to have stalled a modest pullback from the 158.00 neighborhood, or over a five-month top touched on Friday. Doubts over when the BoJ could hike rates again and a positive risk tone undermine the safe-haven JPY.
Gold price bulls seem non-committed around $2,620 amid mixed cues
Gold price struggles to capitalize on last week's goodish bounce from a one-month low and oscillates in a range during the Asian session on Monday. Geopolitical risks and trade war fears support the safe-haven XAU/USD. Meanwhile, the Fed's hawkish shift acts as a tailwind for the elevated US bond yields and a bullish USD, capping the non-yielding yellow metal.
Week ahead: No festive cheer for the markets after hawkish Fed
US and Japanese data in focus as markets wind down for Christmas. Gold and stocks bruised by Fed, but can the US dollar extend its gains? Risk of volatility amid thin trading and Treasury auctions.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.