- EUR/USD is juggling around 1.0780, gathering strength for a fresh upside.
- Odds are favoring that the Fed would go for hiking rates despite knowing the banking sector debacle.
- Eurozone-ZEW Survey dropped to 10.0 after a five-month rising spell.
The EUR/USD pair has turned sideways in the early Tokyo session after printing a fresh five-week high at 1.0788 on Tuesday. The major currency pair has been underpinned despite the odds favoring a 25 basis point (bp) rate hike by the Federal Reserve (Fed). As per the CME Fedwatch tool, more than 87% chances are in favor of a 25 bps rate hike, which would push rates to 4.75-5.00%.
The context that has spooked the market’s sentiment is that Fed chair Jerome Powell would go for hiking rates despite knowing the banking sector debacle whose consequences are yet to be faced ahead.
Meanwhile, a two-day winning spell by S&P500 has shown that the market is trying hard to revive itself from the banking sector shakedown. The risk appetite theme has also weighed on the US Dollar Index (DXY). The USD Index looks vulnerable above 103.00 and is prone to further downside.
On the Eurozone front, the banking sector debacle has hurt the sentiment of the market participants. Eurozone-ZEW Survey that considers the sentiment of institutional investors dropped to 10.0 after a five-month rising spell.
EUR/USD is struggling to extend the 50% Fibonacci retracement (placed from February 01 high at 1.1033 to March 15 low at 1.0516) at 1.0776 on a four-hour scale. Usually, a perpendicular rally in an asset is followed by a mean reversion to near the 20-period Exponential Moving Average (EMA), which is hovering around 1.0711, at the time of writing.
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.
For further upside, the shared currency pair needs to surpass the immediate resistance plotted from January 20 low at 1.0802, which will drive the asset toward January 18 high at 1.0887 and the round-level resistance at 1.0900.
On the flip side, a downside break below March 17 low at 1.0612 would drag the shared currency pair toward March 16 low at 1.0551, followed by March 15 low at 1.0516.
EUR/USD four-hour chart
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 treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.