The EURUSD currency pair has pared some gains from last week as the Greenback attempts to take the front foot in the new week. The investment community will try to make sense of the recent acquisition of Credit Suisse by UBS Bank. The main question on traders’ minds will be if the rescue is a relief for the banking sector or a sign of more problems to come.
If the Banking Sector continues to crumble, the Greenback will likely gain as risk-off sentiment grows into an appetite for safe-haven assets. Traders will also keenly look to the U.S. Interest Rate Decision to determine whether the Federal Reserve will back off from a rate hike to protect the banking sector or commit to fighting inflation with an additional hike.
The EURUSD currency pair has traded in a broad range, forming 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 up towards the 61.80% Fibonacci Retracement Golden Ratio at the 1.06726 level. If bearish traders look to engage at the golden ratio, the pair will likely be lowered, with the 1.05350 level earmarked as a point of interest in a bear case.
Alternatively, if bullish traders look to fight on, a breakout above the golden ratio on high volumes could signal interest in the upside. The 1.07577 level will likely interest traders looking to take the pair higher.
Traders are currently highly sensitive to the Banking Sector’s events. The Greenback will likely continue to play its role as a safe haven asset if further risks come to light. An interest rate hike could further boost the Greenback as higher yields attract capital flows towards it. The 1.05350 level is probable if the USD finds strength.
Sources: Reuters, TradingView