Share:

The euro has put together a 3-day rally and is up again on Tuesday. In the European session, EUR/USD is trading quietly at 1.0756, up 0.30%.

Financial markets settle down

Let’s start with some good news. European stock markets have settled down and are in positive territory. The euro took a bath last Wednesday and plunged 1.47% as Credit Suisse shares tumbled, but the currency has battled back and recovered these losses. The emergency takeover of Credit Suisse by UBS and the joint announcement by six major central banks to boost liquidity have provided some reassurance to the markets that the banking system is not in danger of collapse.

That’s not to say that this nasty bank crisis is behind us. Investors are still trying to come to terms with the lightning collapse of three US banks and Credit Suisse, the second-largest bank in Switzerland, all in just 11 days. Another US bank, First Republic, received an emergency injection of $30 billion from some major US banks, but this may not prove to be enough, as depositors are estimated to have removed $89 billion and the bank’s shares are in freefall.

In light of the bank crisis, central banks will have to weigh their moves carefully and re-evaluate rate policy. The ECB didn’t flinch and delivered a 50-basis point move as promised. Had the ECB decided not to go ahead with the 50-bp hike, it risked losing credibility. As well, the ECB’s primary focus remains containing inflation. With eurozone inflation running at an 8.5% clip, the ECB needed another oversize rate hike.

Could the financial crisis turn out to be a blessing in disguise? Perhaps, according to ECB President Lagarde. On Monday, Lagarde told European lawmakers that market turmoil could dampen demand and “might actually do part of the work that would otherwise be done by monetary policy and interest rate hikes”. Lagarde reiterated that more rate hikes were needed to curb inflation, but didn’t make any commitments as to the pace of rate hikes, which makes sense, given that the current crisis is not over.

EUR/USD technical

  • EUR/USD is putting pressure on resistance at 1.0778. Next is 1.0890.

  • There is support at 1.0647 and 1.0535.

EURUSD

Share: Feed news

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content


Follow us on Telegram

Stay updated of all the news

Join Telegram

Recommended Content

Editors’ Picks

EUR/USD recaptures 1.0700 ahead of key US data

EUR/USD recaptures 1.0700 ahead of key US data

EUR/USD is trading above 1.0700, staging a decent recovery despite soft inflation data from the Euro area. The Euro buyers cheer hawkish ECB commentary while the risk-positive market environment limits the USD's upside ahead of key US data. 

EUR/USD News

GBP/USD rises above 1.2450 as risk flows dominate

GBP/USD rises above 1.2450 as risk flows dominate

GBP/USD is recovering above 1.2450 in the European session, as the US Dollar resumes its downside amid a risk-on market mood. Renewed dovish Fed expectations and US debt deal passage keep the US Dollar undermined ahead of the US ADP jobs and ISM Manufacturing PMI data. 

GBP/USD News

Gold price rebounds toward $1,970 amid renewed US Dollar selling

Gold price rebounds toward $1,970 amid renewed US Dollar selling

Gold price is rebounding toward $1,970, having found strong bids near $1,950. The risk-on market profile is weighing on the US Dollar, enabling Gold price to attempt a recovery. The further upside, however, appears elusive amid rallying US Treasury bond yields. US data awaited. 

Gold News

Bitcoin likely to remain in red through the next quarter if history is any indication

Bitcoin likely to remain in red through the next quarter if history is any indication

Bitcoin (BTC) price produced a monthly close at $27,210, noting a -6.92% return for May. The last-minute slide in BTC put an end to the four-month bullish streak that kickstarted the 2023 rally. 

Read more

C3.ai gets punched in the face, is the AI hype a bit overdone?

C3.ai gets punched in the face, is the AI hype a bit overdone?

OMG! Stocks sold off on Wednesday….and NVDA?  That stock gave back $15 or 3.8% - What is going on? That is not supposed to happen….it can only go up! Quick someone call the NVDA police! 

Read more

Majors

Cryptocurrencies

Signatures