- EUR/USD slumps amid Credit Suisse woes, as the liquidity drained.
- EUR/USD technical outlook: 21-DMA and 50-DMA weighing downside pressure.
- Downside bias intact with eyes on the 1.0500 mark.
- ECB meeting is only hours away.
EUR/USD took a sharp decline after a four-day rally. The declines came after some risk aversion in the wake of the worsening financial condition of Credit Suisse. This is the first sign in Europe that any bank has faced a liquidity crunch issue amid higher borrowing costs. All eyes will be on the European Central Bank (ECB) rate decision for any directional bias.
The EUR/USD pared back most of the gains that took it to the 1.0750 level, which is also pegged with the 50-Day Moving Average (DMA) and a multi-tested support zone coinciding with a 50% Fib level of the 2021-22 decline.
The EUR/USD found its ground after hitting a multi-month low at the 1.0526 mark. The previous day's rapid fall forced the pair to penetrate the 21-DMA, which is now acting as resistance on the rebound.
The 21-DMA is coinciding with the 23.5% Fib level of the 2023 rally and may act as a strong resistance zone. Any upside momentum will have to confront all Fib levels as well as the 21-DMA and 50-DMA. The downside bias is likely to remain intact, and all eyes will be on the 1.0500 key psychological mark; a break below will throw the pair into no man's land.
The short-term trend is down, supporting bears. The 1.04820 lows and the 100-day SMA both present as key support levels. A break and close on a daily timeframe below these levels would be necessary to provide impetus for more downside. If so, the next target comes in as the 200-day SMA at circa 1.0325.
Given the high volatility expected around today’s ECB meeting, which begins with the release of the policy statement at 12:15 GMT, however, traders are advised to act with caution.
EUR/USD: Daily chart
-638145470280245426.png)
Recommended content
Editors’ Picks
EUR/USD tumbles toward 1.1450 as geopolitical tensions escalate
EUR/USD stays under bearish pressure and falls toward 1.1450 on Monday. The renewed US Dollar buying, amid the deepening crisis in the Middle East, and mixed PMI data releases from Germany and the Eurozone weigh on the pair as focus shifts to US data and central bank talks.
Could Iran block the Strait of Hormuz? Why Oil is on edge after US strikes
As the Israel-Iran conflict reaches new heights, an old threat is coming back to haunt the markets: that of the closure of the Strait of Hormuz. This narrow arm of the sea in the Persian Gulf, wedged between Iran to the north and the United Arab Emirates and Oman to the south, is much more than a simple sea passage.
Gold stays below $3,400 on broad USD strength
Gold stays on the back foot to start the week and trades below $3,400. Although XAU/USD's manages to limit its losses, the US Dollar (USD) also benefits from escalating geopolitical tensions in the Middle East, making it difficult for the pair to gather recovery momentum.
Five fundamentals for the week: World anxiously awaits Iran's response Premium
The Middle East remains in the spotlight after a turbulent weekend. Fed Chair Jerome Powell faces lawmakers and may shed more light on the central bank's thinking, and a key inflation figure is expected later to promise a strong end to the week.
GBP/USD holds recovery above 1.3400, with eyes on UK PMI, Middle East woes
GBP/USD is holding its rebound above 1.3400 in the European session on Monday. The fears that Iran would retaliate against US attacks on its nuclear sites continue to support the safe-haven US Dollar. Investors await the June preliminary PMI readings from the UK and the US for fresh trading directives.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.