EUR/USD Advances Beyond 1.0700 as Investors Await FOMC Verdict
2023.03.20 13:48
The pair gained ground at the start of a new week, climbing above 1.0700 as investors are betting on higher odds the Federal Reserve will raise rates at a slower pace on Wednesday.
At the time of writing, the EUR/USD pair is trading at 1.0723, 0.6% above its opening price, after hitting a daily high of 1.0730 and a low of 1.0632.
The financial crisis, triggered by the downfall of several U.S. banks, has lifted expectations global central bankers will take a step back in their tightening cycles.
On Sunday, the Federal Reserve announced a joint-collaboration plan with the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank to improve liquidity provision via the standing U.S. dollar liquidity swap line arrangements. The move came after Swiss authorities intervened to have UBS buy Credit Suisse to prevent a disorderly bankruptcy of the latter.
U.S. Treasury yields have recovered after falling sharply earlier on the day, with the 10-year note yielding 3.498% and the 2-year note rate at 3.974%. Meanwhile, Wall Street main indexes are trading in the green, reflecting the improvement in sentiment.
Ahead of the FOMC verdict on on Wednesday, the bets of a non-hike decision increased somewhat. Still, according to WIRP, investors continue to bet on higher possibilities of a 25 bps raise on Wednesday.
From a technical perspective, the EUR/USD pair’s short-term outlook has turned positive according to indicators on the daily chart, while the price continues to print higher highs above its main moving averages.
On the upside, short-term resistance levels are seen at the 1.0760 zone and the 1.0800 psychological level. On the flip side, support levels line up at the 20- and 100-day SMAs, currently at 1.0625 and 1.0575, respectively.
