EUR/USD, EUR/GBP and USD/JPY stabilize ahead of ECB meeting
Outlook on EUR/USD, EUR/GBP and USD/JPY as Credit Suisse taps liquidity from the Swiss National Bank ahead of ECB’s rate announcement.
EUR/USD stabilises ahead of ECB monetary meeting
EUR/USD’s sharp decline to levels last seen in early January due to the European banking crisis brought on by grave concerns regarding the solvency of Credit Suisse, which shares dropped by 24% on Wednesday, has temporarily halted as the bank will borrow up to 50 billion francs (£44.5 billion) from the Swiss National Bank (SNB) to shore up its finances.
EUR/USD thus recovered from its $1.0516 Wednesday low to around the $1.06 mark ahead of Thursday’s European Central Bank (ECB) monetary policy meeting in which it is expected to either not hike its rates or only by 25 basis points (bps) to 3.25%, when only last week a hike to 3.5% seemed to be a certainty.
Good support for EUR/USD can be spotted between the late-February and current-March lows at $1.0533 to $1.0516, and resistance above this morning’s intraday high at $1.0615 at the mid-February low at $1.0655 as well as the 7 February low at $1.0669.
EUR/GBP recovers on SNB help for Credit Suisse
EUR/GBP's tumble to £0.8719, made near the £0.8722 January low, due to the European banking crisis, has been followed by an overnight recovery rally on the news that Credit Suisse can tap the SNB for liquidity, should it require to do so, calming the Euro’s sharp sell-off ahead of Thursday’s ECB rate announcement.
A rise back towards the £0.8803 mid-February low is thus underway with the March resistance line and early-March low at £0.8826 being in focus. For the bulls to be back in control, a rise and daily chart close above the 55-day simple moving average (SMA) and Wednesday’s high at £0.8837 to £0.8843 would need to be seen.
Slips should find support on Thursday between today’s intraday low and the February trough at £0.8762 to £0.8755.
USD/JPY holds at support as Japan shows trade gap for 19th month
USD/JPY’s retest of the 55-day SMA and Monday’s low at ¥132.42 to ¥132.28 led to the ¥132.22 being touched before news that Japan showed a trade gap for the 19th straight month, the longest stretch since 2015, and that Japan machinery orders jumped more than expected, helped stabilise the cross.
Were the ¥132.42 to ¥132.22 support zone to give way, the mid-January high at ¥131.58 would be eyed next, followed by the 24 January high at ¥131.12.
Resistance above Thursday’s intraday high at ¥133.49 can be found at the 24 February low at ¥134.06 with more significant resistance sitting at the ¥132.28 led to the ¥135.11 high seen on Wednesday. While it caps, downside pressure should retain the upper hand.
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