The EURUSD pair encounters some supply during the Asian session on Tuesday. Snapping a three-day winning streak to a nearly one-month high set the day before. A minor rise in US Treasury bond rates helps the US Dollar to halt its recent dramatic drop from a multi-week high. Which is expected to put downward pressure on the major.
Rebounding US bond rates support the Dollar, although less aggressive Fed views limit gains.
The increase in US bond yields comes as US regulators sought to lessen the damage from Silicon Valley Bank’s abrupt failure (SNB). In fact, the Federal Reserve said on Sunday that it will make more money available to qualifying depository institutions to assist ensure.
Banks can meet the demands of all depositors. In addition, President Joseph Biden stated the administration’s quick efforts to protect depositors’ access to cash in SVB and Signature Bank should reassure People that the US banking system is secure. But the USD’s upside is likely to be limited due to concerns that the US central bank would reduce. If not halt, its interest rate-hiking cycle in response to the strain on the US banking system.
EURUSD Traders are now looking for some encouragement ahead of the ECB announcement on Thursday.
Apart from that, increased bets of another big 50 bps rate rise by the European Central Bank (ECB) should continue to support. The common currency and help to limit the EURUSD pair’s fall. Traders may also avoid putting aggressive bets and prefer to remain on the sidelines ahead of big data/event risks. This week’s quite interesting the hectic. US economic calendar begins on Tuesday with the release of the most recent consumer inflation numbers. Followed by the Producer Price Index (PPI) and monthly Retail Sales figures on Wednesday. Apart from that, investors will look to the ECB’s monetary policy decision. Which is set to be revealed on Thursday, to determine the next leg of the major’s directional move.
Because of the aforementioned mixed fundamental background. It is recommended to wait for substantial follow-through selling before concluding that the current rally from a technically important 100-day Simple Moving Average (SMA) has peaked. Yet, the EURUSD pair appears to have steadied around 1.0700. And is more likely to consolidate in a narrow area ahead of the pivotal US election. The ECB event and macro data.
