The Greenback gave up some of its gains in late Wednesday trading as markets calmed following lifelines extended to the banks showing cracks. Credit Suisse and First Republic Bank shares gained after the Swiss National Bank and large U.S. Banks stepped in, extending billions to the respective banks to shore up their liquidity.
With the Euro CPI looming, the EURUSD currency pair was boosted by 1% following The European Central Bank’s 50 basis point rate hike, which aligned with expectations. Traders will focus on next week’s U.S. Interest Rate decision to digest the bank’s reaction to sticky inflation and the banking sector’s woes. A 25 basis point rate hike is primarily expected and could provide an intermittent boost to the Greenback.
The EURUSD currency pair has traded in a wide range, moving sideways in a rectangle pattern. Support and resistance were established at the 1.05350 and 1.07577 levels, respectively.
Following a rejection of support, price action was driven higher with considerable bullish momentum. Bullish traders will likely aim for the 1.07577 if price action breaks above the 61.80% Fibonacci Retracement Golden Ratio at the 1.06726 level on high volume.
Alternatively, bears will probably look to the Golden ratio as a dynamic resistance level to short from if a breakout above the level does not occur. Bears will likely look to the 1.05350 level with interest in a bear case.
The Greenback lost its footing to the Euro due to the restoration of calm in the banking sector and risk appetite creeping in. Higher interest rates also boosted the Euro as its high-yielding capability shined. Traders will await the Euro CPI and highly anticipated Fed interest rate decision to determine the next card to play.
Sources: Reuters, TradingView