- Risk appetite is returning and supporting the Euro.
- EUR/USD bulls are climbing their way towards 1.09´s.
EUR/USD climbed to a five-day high at 1.0846 as euro zone government bond yields rose on Tuesday and after a deal backed by the US regulator for First Citizens BancShares to buy up Silicon Valley Bank helped alleviate concerns in the banking sector. At the time of writing, EUR/USD is trading at 1.0841 and is 0.4% higher having rallied from the day´s low of 1.0795.
The US Dollar fell against a basket of currencies for a second straight day on Tuesday with the DXY, which measures the currency against six rivals, falling to a low of 102.41, not far now from the seven-week low of 101.91 hit last Thursday.
Last week, the Federal Reserve's Federal Open Market Committee raised interest rates by 25 basis points, as expected, but took a cautious stance due to the banking sector crisis at hand. Nonetheless, Fed Chair Jerome Powell kept the door open for further rate rises if necessary which stalled the drop in the US Dollar.
´´We believe that markets are overestimating the Fed’s capacity to ease and so the dollar should eventually recover when expectations are repriced,´´ analysts at Brown Brothers Harriman argued.
´´Fed officials continue to view the banking crisis as a regulatory failure. If this turns out to be so, the impact on monetary policy is likely to end up being not too significant,´´ the analysts added.
´´The next FOMC meeting is May 2-3 and WIRP suggests around 55% odds of 25 bp hike then. After that, it’s all about the cuts. Nearly two cuts by year-end are priced in. While down from 4-5 cuts priced in during the height of the banking crisis earlier this month, even two cuts seems very unlikely. In that regard, Powell said after the March 22 decision that Fed officials “just don’t see” any rate cuts this year.´´
EUR/USD technical analysis
Meanwhile, EUR/USD has broken out of the falling wedge resistance and is eyeing a run to test prior highs in the 1.09´s. However, a break of the micro trendline support will open the risk of a significant drop as illustrated above.
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
USD/JPY holds near 155.50 after Tokyo CPI inflation eases more than expected
USD/JPY is trading tightly just below the 156.00 handle, hugging multi-year highs as the Yen continues to deflate. The pair is trading into 30-plus year highs, and bullish momentum is targeting all-time record bids beyond 160.00, a price level the pair hasn’t reached since 1990.
AUD/USD stands firm above 0.6500 with markets bracing for Aussie PPI, US inflation
The Aussie Dollar begins Friday’s Asian session on the right foot against the Greenback after posting gains of 0.33% on Thursday. The AUD/USD advance was sponsored by a United States report showing the economy is growing below estimates while inflation picked up.
Gold soars as US economic woes and inflation fears grip investors
Gold prices advanced modestly during Thursday’s North American session, gaining more than 0.5% following the release of crucial economic data from the United States. GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the US Fed could lower borrowing costs.
Ethereum could remain inside key range as Consensys sues SEC over ETH security status
Ethereum appears to have returned to its consolidating move on Thursday, canceling rally expectations. This comes after Consensys filed a lawsuit against the US SEC and insider sources informing Reuters of the unlikelihood of a spot ETH ETF approval in May.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.