EUR/USD sees more downside to near 1.0900 as ECB to slow down policy-tightening pace

  • EUR/USD is expected to witness more downside to near 1.0900 as the Fed to remain hawkish in May.
  • Eurozone is prone to a credit crunch after the collapse of several US regional banks and takeover of Credit Suisse.
  • The ECB is highly expected to raise rates by 25bps in its May policy meeting.

The EUR/USD pair is continuously declining for the past two trading sessions after failing to sustain above the critical resistance of 1.1050. The major currency pair is expected to extend its downside to near 1.0900 as investors are supporting the US Dollar Index (DXY) on expectations of one more rate hike announcement from the Federal Reserve (Fed).

The USD Index has shown a minor correction after printing a fresh three-day high of 102.22 as Fedfunds market is conveying that one more rate hike cannot be ruled out despite easing labor market conditions and softening United States inflation. President and CEO of the Federal Reserve Bank of Richmond Thomas Barkin said that he wants to see more evidence of inflation settling back to target.

Meanwhile, S&P500 futures have turned subdued in the Asian session after settling Monday’s session on a positive note. Market sentiment is still positive but a stock-specific action is highly observed amid the quarterly result season.

The Euro witnessed extreme selling pressure as investors are divided about the pace of hiking interest rates by the European Central Bank (ECB). Also, ECB policymaker Martins Kazaks said on Monday, the central bank has the option of 25 basis points (bps) or 50 bps move in May.

However, Bloomberg looks confident after a survey from economists, showing that a majority of them expect the European Central Bank (ECB) to hike rates by 25 basis points (bps) at its May, June, and July policy meetings before pausing its tightening cycle. “That would take the deposit rate to 3.75%, where it would stay through the rest of the year.”

Another report from Bloomberg showed that the Eurozone economy is facing the danger of a lending squeeze following the recent banking turmoil, according to the continent’s largest pension services provider.

Thijs Knaap, a chief economist at Netherlands-based APG Asset Management, said, “The risk of a credit crunch is there and it certainly increased” after the collapse of several US regional banks and the emergency takeover of Credit Suisse Group AG, reported Bloomberg.

The comments are markedly less optimistic than statements from some European Central Bank officials, who are hopeful that the 20-nation eurozone can emerge from the financial sector turbulence with little damage and continue raising interest rates.


Today last price 1.0928
Today Daily Change -0.0064
Today Daily Change % -0.58
Today daily open 1.0992
Daily SMA20 1.0878
Daily SMA50 1.0743
Daily SMA100 1.071
Daily SMA200 1.037
Previous Daily High 1.1076
Previous Daily Low 1.0972
Previous Weekly High 1.1076
Previous Weekly Low 1.0837
Previous Monthly High 1.093
Previous Monthly Low 1.0516
Daily Fibonacci 38.2% 1.1012
Daily Fibonacci 61.8% 1.1036
Daily Pivot Point S1 1.0951
Daily Pivot Point S2 1.091
Daily Pivot Point S3 1.0847
Daily Pivot Point R1 1.1054
Daily Pivot Point R2 1.1117
Daily Pivot Point R3 1.1158



Share: Feed news

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

Recommended content

Editors’ Picks

EUR/USD flirts with 1.0700 post-US PMIs

EUR/USD flirts with 1.0700 post-US PMIs

EUR/USD maintains its daily gains and climbs to fresh highs near the 1.0700 mark against the backdrop of the resumption of the selling pressure in the Greenback, in the wake of weaker-than-expected flash US PMIs for the month of April.


GBP/USD surpasses 1.2400 on further Dollar selling

GBP/USD surpasses 1.2400 on further Dollar selling

Persistent bearish tone in the US Dollar lends support to the broad risk complex and bolsters the recovery in GBP/USD, which manages well to rise to fresh highs north of 1.2400 the figure post-US PMIs.


Gold trims losses on disappointing US PMIs

Gold trims losses on disappointing US PMIs

Gold (XAU/USD) reclaims part of the ground lost and pares initial losses on the back of further weakness in the Greenback following disheartening US PMIs prints.

Gold News

Here’s why Ondo price hit new ATH amid bearish market outlook Premium

Here’s why Ondo price hit new ATH amid bearish market outlook

Ondo price shows no signs of slowing down after setting up an all-time high (ATH) at $1.05 on March 31. This development is likely to be followed by a correction and ATH but not necessarily in that order.

Read more

Germany’s economic come back

Germany’s economic come back

Germany is the sick man of Europe no more. Thanks to its service sector, it now appears that it will exit recession, and the economic future could be bright. The PMI data for April surprised on the upside for Germany, led by the service sector.

Read more