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Pullback Likely Amid Rush to Safety

The EUR/USD pair rose to a high of 1.0677, which was slightly below the key resistance point at 1.0695, the highest point on March 6 and March 1. 

  • Sell the EUR/USD pair and set a take-profit at 1.0600.
  • Add a stop-loss at 1.0750.
  • Timeline: 1-2 days.
  • Set a buy-stop at 1.0700 and a take-profit at 1.0800.
  • Add a stop-loss at 1.0600.

The EUR/USD price drifted higher on Monday morning as the turmoil in the banking sector continued. The closely-watched forex pair rose to a high of 1.0696, the highest point since March 15 of this year. It has been rising gradually after last week’s European Central Bank (ECB) decision.

The European banking sector remained on edge during the weekend as regulators fought to prevent Credit Suisse from falling. According to Bloomberg, the company was shedding over $10 billion in deposits per day last week.

As a result, Swiss authorities decided to either nationalize the bank or sell it at a bargain to UBS. The latter option prevailed, with UBS buying the company for just $2 billion. In its peak, Credit Suisse was valued at over $50 billion, making it one of the biggest banks in the world.

Therefore, the focus in the morning hours will be on European banks like Unicredit, BNP Paribas, and Societe Generale. Most importantly, investors will continue watching America’s regional banks as the industry deals with its biggest crisis since the Global Financial Crisis.

The worsening situation could push forex traders to the safety of the US dollar. They have recently moved to the safety of government bonds, gold, and even Bitcoin. Bitcoin surged to $28,000 during the weekend.

There will be no major economic data from Europe and the US on Monday. Therefore, traders will still be focusing on the upcoming decision by the Federal Reserve. Analysts believe that the Fed is in a fix now, with high inflation coinciding with elevated financial market risks.

The Fed will likely continue hiking interest rates although it is unclear by how much. Some analysts believe that the Fed will hike rates by 0.25%, which will be a compromise considering Powell recently pointed to a 50 basis point hike.

The EUR/USD pair rose to a high of 1.0677, which was slightly below the key resistance point at 1.0695, the highest point on March 6 and March 1. The pair has moved slightly above the 25-period and 50-period moving averages while the RSI has risen slightly above the neutral point at 50.

Therefore, the pair will likely retreat as traders move to the safety of the US dollar. If this happens, the pair will likely retest the next key support at 1.0600.


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