EUR/USD PRICE, CHARTS AND ANALYSIS:
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EUR/USD FUNDAMENTAL OUTLOOK
EURUSD rallied overnight printing a fresh one-month high at 1.0737 as the USD selloff continued. The currency strength chart below heading into the European session shows the weakness of the safe-haven dollar as a recovery in risk sentiment weighed on EURUSD.
Currency Strength Chart: Strongest – AUD, Weakest – USD.
The European open has seen EURUSD retreat slightly flirting once more with the 1.0700 as markets digest the SVB news and emergency measures by US authorities to ensure confidence in the banking sector. Regulators confirmed that the Bank’s customers would have access to their deposits on Monday whilst also setting up a new facility to provide banks access to emergency funds.
EURUSD upside still looks more favorable moving forward as Friday saw market participants drop the expectations for a 50bps hike from the Federal Reserve at its March meeting. This contrasts with the European Central Bank (ECB) whose interest decision is due on Thursday, with consensus and market participants favoring a 50bps hike. We have heard this rhetoric echoed by ECB President Christine Lagarde as well as a few ECB policymakers over the last few weeks as inflation remains uncomfortably high in the Euro Area.
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There aren’t any significant data releases on the calendar today, but some big events lie ahead this week as we have inflation data out of the US and of course the ECB rate decision. Both will likely be a driving force for EURUSD price action moving into the Q2 2023.
For all market-moving economic releases and events, see the DailyFX Calendar
From a technical perspective, EURUSD printed a fresh one-month high during the Asian session but has failed to hold onto gains heading into the European session. Looking at the daily chart price is currently in a key resistance zone between the 1.0670-1.0700 level with a daily candle close above needed to confirm bullish continuation.
EURUSD did open with a gap overnight which is something to bear in mind as markets generally close such gaps with the timing usually uncertain. However, the retracement seen following the European open leaves the pair trading at 1.0674 (at the time of writing). This leaves EURUSD only 30-odd pips from closing the gap around 1.0639, at which point the reaction will be key.
A bounce from there is likely to retest the resistance area at 1.0670-1.0700 and possibly higher while a break below could lead us toward the 1.0600 and possibly lower. The move is likely to depend on whether the improving risk sentiment and confidence in the US banking sector continues into the US session or not.
EUR/USD Daily Chart – March 13, 2023
Written by: Zain Vawda, Market Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda