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EURUSD Edging Back Towards Session Highs, Bull Cycle Still In Play

EUR
  • EUR/USD traded higher Monday, extending last week’s recovery from 1.0525, the Mar 8 low. The pair has consolidated those gains on Tuesday and is hovering just below the most recent highs at 1.0749 in late US trade.
  • Resistance at 1.0694 has been cleared, the Mar 6 / 7 high. This has strengthened a short-term bull theme and opened 1.0779 next, a Fibonacci retracement. Gains are considered corrective - for now. Support to watch remains yesterday’s intraday low of 1.0640 where a break would signal a top.
  • As well as tomorrow’s US data, the focus is on Thursday’s ECB decision, where it is still our expectation the ECB will hike by 50bp given the persistence of underlying inflation and resilience of the euro area economy.
  • However, our conviction is much weaker at this point given the most recent developments regarding SVB. Even if the ECB goes ahead as planned, the heightened uncertainty would preclude further explicit rate guidance beyond March. Our full preview is here.

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