EUR/USD bulls and bears clash between key supports and resistances

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  • EUR/USD remains in familiar territory after the ECB.
  • Calmer markets after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank.
  • The bias is to break the horizontal support of 1.0480 to open perspectives of movement towards 1.0450.

The pair EUR/USD It’s up on the day, but barely made any headway after the European Central Bank raised interest rates as planned, despite market turmoil and the banking crisis. At the time of writing, the EUR/USD pair is trading at 1.0595 and up 0.18% on the day. The pair has oscillated between a low of 1.0551 and 1.0635.

The ECB announced a half percentage point rate hike, as promised to curb inflation:

  • Main refinancing rate at 3.50% vs. 3.00% prior.
  • The interest rate of the marginal credit facility rises to 3.75% compared to the previous 3.25%.
  • The deposit facility at 3.00%, compared to the previous 2.50%.
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On the whole, the Governing Council remains very concerned about inflation, analysts at TD Securities explained, noting the first sentence of the publication: “Inflation is expected to remain too high for too long.”

OFML were not announced, but the statement shows a willingness to provide liquidity if necessary. On the other hand, there were no indications in the statement of further increases in monetary policy.

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Short-term Treasury yields rose, while those of 10+ years fell after a volatile initial market reaction to the ECB’s decision.

Meanwhile, markets were calmer on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to bolster liquidity and investor confidence. Bank holdings plunged like a stone 30% on Wednesday.

EUR/USD Technical Analysis

On the daily chart, the EUR/USD pair is at daily support and is limited by daily resistance. Although it is behind the previous uptrend and resists below 1.0700, the trend is for a break of the 1.0480 horizontal support to open up prospects for a move to 1.0450 before the 200 DMA.

On the hourly chart, the price has held below a 50% reversal after breaking through the horizontal support. If the bears commit, a break of support will put the -272% Fibonacci level in the spotlight near 1.0450.

Source: Fx Street

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