The EUR/USD stays in the green zone and trades above the psychological price level of 1.0700, having moved back earlier in the day. ECB President Lagarde insists that Eurozone inflation is still very high and will likely remain so for some time.
These levels come after a rate hike steadily, keeping the Euro in a good position. The tear in the banking system in the U.S. is getting more pronounced as sell-offs continue. Traders are rushing to acquire haven assets like Gold; however, some are betting on the crypto sector.
Technical Analysis of The EUR/USD Pair
The currency pair is expected to hit a daily high of 1.0710 before the American trading session on Tuesday. However, the daily chart shows an increased risk of the bullish trend continues. The 20-day Simple Moving Average (SMA) lacks directional strength, but there is support along the intraday lows.
Meanwhile, the 100-day SMA is gaining momentum below the 200-day SMA, and technical indicators strongly suggest that the trend will head north to hit the 1.0745 level, representing the 61.8% Fibonacci retracement level.
On the four-hour chart, the bulls are in favor as the pair is advancing above all its moving averages, offering bullish signals in upper percentiles. If the pair can move above the 1.0745 resistance level, it could see an immediate uptick to the 1.0790 level, followed by a target of the 1.0825 highs.
The four-hour chart’s Relative Strength Index (RSI) also points toward a bullish outlook. However, if the bears gain momentum and drop the price below the current level, the selling pressure could see the pair hit 1.0685 and target 1.0640.
After that, the sellers will aim to hit the 1.0600 level, a significant support area. The 50-day SMA also offers support around this level, which could prevent the bears from pushing the price further down.
Fundamental Analysis of The EUR/USD Pair
The markets began the week with cautious optimism, buoyed by the news that UBS would partner with A.G. to buy the troubled Credit Suisse Group for $3.23 billion. This news relieved the Swiss economy, and the EUR/USD increased during the European session.
Although the pair saw a slight decline during the day, it inched upward to the 1.0700 thresholds by closing time. Market sentiment was further boosted by the Federal Reserve’s decision to offer swaps daily to ensure enough liquidity to continue daily operations.
Traders are now looking forward to the Fed meeting on Wednesday, with some predicting a 25bp rate hike while others expect the Fed to remain unchanged. The percentage of a 50bp rate hike is currently considered very low.
Regarding data, the German PPI rose at an annual rate of 15.8%, higher than analysts had expected at 12.4%. However, on a monthly scale, there was a marginal dip of 0.3%, slightly higher than the predicted 0.5%. In addition, the Eurozone trade balance indicated a deficit of over 11.3 billion, much better than analysts had expected.
As the week progresses, market participants will watch closely for new developments affecting currency movements, especially with the upcoming Fed meeting. As a result, the U.S. dollar could see some significant fluctuations depending on the outcome of the meeting, and traders will be carefully monitoring the situation.
