Bearish view
- Set a sell-stop at 1.0930 and a take-profit at 1.0850.
- Add a stop-loss at 1.1020.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0990 and a take-profit at 1.1060.
- Add a stop-loss at 1.0800.
The EUR/USD price was flat on Thursday as attempts to bounce back faltered. The pair was reacting to the relatively stable US bank earnings, Federal Reserve’s Beige Book, and European consumer inflation data. It was trading at 1.0953, which was a few pips above its lowest level this year.
Banking sector stable
One of the biggest themes in the market this week was the ongoing bank earnings. Traders and policymakers were watching the sector to see whether there were more issues following the collapse of Silicon Valley Bank and Signature.
Financial results have been relatively stable. For example, Western Alliance Bancorp, which was seen as highly vulnerable said that deposits were starting to rise after dipping initially. It has regained $3 billion in deposits recently, recouping about 40% of funds that it lost after SVB’s collapse.
The EUR/USD pair also reacted to the latest Beige Book of the Federal Reserve. The report warned that the economy had slowed recently, with hiring and inflation slowing down. In its previous Beige Book, which came before SVB’s collapse, the Fed said that the economy had remained resilient.
Therefore, the report means that the Fed will likely hike interest rates by 0.25% in April and then pause as odds of a recession rise. Analysts cite the inverted yield curve, which has accurately predicted recessions in the past decades.
Economic data from Europe were in line with estimates. The headline inflation dropped to 6.9% while core inflation rose to 5.7%. And in a statement after the CPI data, Philip Lane, ECB’s economist, said that the bank will hike by 0.25% in May in its battle against inflation.
The key news that will move the EUR/USD pair on Thursday will be minutes of the ECB and the latest Philadelphia Fed manufacturing index.
EUR/USD technical analysis
The EUR/USD has been attempting to rebound after it dropped to a low of 1.0910 on Monday. It has moved slightly above the lower side of the ascending channel shown in orange. The pair is also oscillating at the 25-day and 50-day moving averages. It has also moved inside the Ichimoku cloud. At the same time, the Williams % Range and the Choppiness oscillators are pointing upwards.
Therefore, more upsides will only be confirmed if the pair moves above this week’s high at 1.098. A drop below last Monday’s low of 1.0912 will signal that there are more downsides.
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