EUR/USD Price Analysis – March 13, 2023

Daily Price Outlook

The EUR/USD is trading at 1.0690, up 0.44%in 24 hours. Traders bet that the Federal Reserve will moderate its aggressive stance in the coming days in reaction to an escalating banking crisis in the US, which helped the pair recover upward momentum.

Easing Hawkish Fed bets

The collapse of Silicon Valley Bank serves as a reminder of the US economy's growing gaps caused by a rise in interest rates. The sudden failure and FDIC seizure of SVB Financial Group on Friday triggered a rushed closed-door meeting of the Federal Reserve Board of Governors on Monday.

The Fed took urgent action to ease bank borrowing restrictions. The White House also assured Silicon Valley Bank depositors to cover all withdrawals.

It is worth noting that market worries of no Fed rate rises in March, due to the latest imbalance in the US banking industry, appear to be weighing on the US Dollar. Fed Rate Monitor Tool shows that most traders expect the Fed to raise interest rates by 25 basis points this month, down from 50 basis points.

The outcome was a sharp decline in the dollar relative to a basket of currencies, with DXY trading 0.52% down at 104.03. The current price of the US 10-Year Bond Yield is 3.743%, up 1.29%. The unexpected decline in the dollar boosted the value of the EUR/USD currency pair.

Meanwhile, the US Nonfarm Payrolls (NFP), which came in higher than expected, appears to challenge the risk-on stance in anticipation of this week's events. Traders are looking forward to the release of the US consumer price index on Tuesday. Yet, with the announcement of the US CPI, market reaction may be limited unless there is a huge surprise.

ECB Upcoming Monetary Policy Meeting

The European Central Bank (ECB) will hold its monetary policy meeting on Thursday. The hawks are in charge of monetary policy. While economic activity seems to be building up, the increased inflation readings and the new cyclical high in the core rate have quieted opposition from those who favor a more flexible policy.

The staff will revise its economic predictions during the ECB meeting. The CPI projection for December showed a decline from 8.4% last year to 6.3% this year, 3.4% in 2024, and 2.3% in 2025. As a result, the market is more upbeat.

Furthermore, the ECB is anticipated to announce a rate increase of 0.50% and may help in the current risk-on market to support the EUR/USD price.

EUR/USD Intraday Technical Levels

Support      Resistance

1.0652         1.0708

1.0622         1.0734

1.0596         1.0764

Pivot Point: 1.0678

EUR/USD – Technical Outlook

The EURUSD pair came within a few pips of our predicted positive target at 1.0745 but is currently exhibiting a negative bias due to stochastic negativity.

Yet, we forecast a good momentum to propel the price to continue its bullish trend, with objectives at 1.0800 and 1.0925 after surpassing the previous level.

The EMA50 supports this positive scenario, which will remain valid unless there is a break below 1.0645 and a persistent hold below that level. Today's trading range is predicted to fall between support at 1.0610 and resistance at 1.0780.