After ending the first two days of the week in positive territory. The EURUSD has entered a consolidation phase and declined modestly early Wednesday. In the absence of high-impact data releases and fundamental catalysts. The pair’s losses are likely to be limited in the short term by the risk-averse market environment.
If market sentiment remains positive, the USD may struggle to gain ground.
The Euro Stocks 50 opened decisively higher, boosted by strong gains in Asian equity indices. On Tuesday, Andrea Enria, Chair of the European Central Bank’s (ECB) Supervisory Board, stated that the direct exposure to Credit Suisse was significant but manageable. Similarly. “We should not be concerned about bank woes spreading to the Eurozone,” said ECB policymaker Madis Muller.
Meanwhile, futures on US stock indexes are up 0.6% to 0.7%. and 0.9% in the European session, indicating a risk-on market environment.
The only data on the US economic calendar will be February Pending Home Sales, which is unlikely to cause a market reaction.
The major indexes on Wall Street finished marginally lower on Tuesday, owing to the poor performance of technology stocks. At the time of publication, Nasdaq Futures were up 0.9% on the day, implying that tech stocks could rebound and lead a risk rally in the afternoon. In that case, the US Dollar may struggle to gain strength, and vice versa.
EURUSD Technical Outlook
The EURUSD appears to have encountered temporary resistance at 1.0850, ahead of 1.0870. (Static level). The pair could target 1.0900/1.0910 if the four-hour close is above the latter (psychological level, end-point of the latest uptrend).
On the downside, the Fibonacci 23.6% retracement of the most recent uptrend, at 1.0820, serves as key support before 1.0800 (psychological level, 20-period Simple Moving Average (SMA) on the four-hour chart) and 1.0780. (50-period SMA).
