EUR/USD Forex Signal: SVB Collapse, US Inflation, ECB Decision – 13 March 2023
The EUR/USD pair is still hovering slightly above last week’s low of 1.0525. It is between the ascending green channel and the 25-day and 50-day exponential moving averages (EMA).
The EUR/USD price retreated slightly on Monday morning as investors wait for an extremely busy week in the market. It was trading at 1.0638, which was a few points below last Friday’s high of 1.0702. The focus will be on the upcoming US inflation numbers and the health of the global banking sector.
The biggest news in the market is about the collapse of SVB, the 16th biggest bank in the United States. The company failed after experiencing a bank run following its unexpected cash call last week. As a result, there are concerns that other regional and even global banks could fail. In a tweet, Bill Ackman, a billionaire, warned that more banks will fail this week.
These elevated risks in the market mean that the Federal Reserve could shift its tone in the coming meetings. In his statement this month, Jerome Powell insisted that higher interest rates were needed to fight the elevated inflation. Other Fed officials like Loretta Mester have also been supportive of higher rates. However, with the banking sector on edge, there is a likelihood that the Fed will be more careful.
Macro data are also moving the EUR/USD pair. On Friday, data by the Bureau of Labor Statistics showed that the country’s labor market was still strong. It created more than 317k jobs in February after it added over 51k jobs in January. The unemployment rate rose gradually to 3.6% while wages grew at a slower pace than expected.
Focus now shifts to the upcoming US inflation data and ECB decision. Economists expect the headline CPI to pull back to about 6%. If they are accurate, it will signal that the Fed needs to continue tightening. The ECB is expected to hike rates by 0.50% when it completes its meeting on Thursday.
The EUR/USD pair is still hovering slightly above last week’s low of 1.0525. It is between the ascending green channel and the 25-day and 50-day exponential moving averages (EMA). The pair is slightly below the 23.6% Fibonacci Retracement level and above the Ichimoku Cloud. Its highest point on Friday was an important level since it was also the highest point on March 7 and March 1. As such, it has formed what looks like a triple-top pattern.
Therefore, the pair will likely continue retreating as sellers target last week’s low at 1.0525. A move above last Friday’s high of 1.0693 will invalidate the bearish view.