EURUSD is pushing ahead of the resistance level from February after recent data with US retail sales released on Friday.
EURUSD – Daily Chart
EUR/USD trades at 1.1050 after getting ahead of the 1.1033 resistance. Traders should look for a potential rejection near this level.
The euro has been able to mount a charge against the highs after another drop in inflation in the United States.
Annual inflation dropped more than analysts had expected, with a 5% print against the 5.2% expectations. That made traders believe the Federal Reserve would slow its aggressive rate hike policy.
Comments from the Bank of England governor and famed investor Warren Buffett cooled fears of further banking problems in Western nations. Buffett said that despite further bank failures, depositors would be protected, and panic was not warranted.
The key driver for the EURUSD was yesterday’s FOMC minutes, where US policymakers lowered their expectations for interest rates after the banking crisis.
The uncertainty created by the banking turmoil led to Fed officials raising their benchmark rate by just a quarter-point, rather than a more extensive hike, despite previous signs that inflation was still running too high, according to the March 22-23 meeting minutes.
However, the inflation figures have been dropping in the United States, relieving investors that corporations and consumers will get a break from higher rates.
EURUSD Forecast
The aggressive interest rate policy created the Silicon Valley Bank collapse rises after regional banks had parked their money in low-interest rate-bearing instruments. They were caught cold by the surge in rates by the Federal Reserve and took significant losses on their investment holdings. Once investors realised this, they pulled their deposits from the troubled banks.
Traders can look for the price action in EURUSD at this level to determine the following path. A continuation can be traded if the euro remains elevated, but a rejection can be played back into the range.
The euro may be at risk from the talk of China invading Taiwan, and the dollar would return to its haven status.
