EUR/USD bulls and bears in a brawl between key support and resistance
- EUR/USD holds in familiar territories after the ECB.
- Markets are calmer after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank.
- The bias is for a break of the horizontal support of 1.0480 to open prospects of a move to 1.0450.
EUR/USD is higher on the day but hardly making headway after the European Central Bank raised interest rates as planned despite market turmoil and the banking crisis. At the time of writing, EUR/USD is trading at 1.0595 and higher by 0.18% on the day. The pair has traveled between a low of 1.0551 and 1.0635.
The ECB announced a half-percentage point rate hike as promised to curb inflation as follows:
- Main refi rate at 3.50% vs 3.00% prior.
- Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
- Deposit facility to 3.00% vs 2.50% prior.
All in all, the Governing Council remains highly concerned about inflation, analysts at TD Securities explained, noting the first sentence of the release as being: "Inflation is projected to remain too high for too long".
No LTROs were announced, but the statement shows a willingness to provide liquidity if needed. Moreover, there was no indication in the statement of future policy hikes. Treasury yields rose at the short end, while notes and bonds with maturities of 10 years or more fell after an initial volatile reaction by markets to the ECB decision.
Meanwhile, markets were broadly calmer on Thursday after Credit Suisse said it would borrow up to $54 billion from the Swiss National Bank to shore up liquidity and investor confidence. The bank's shares sank like a stone by 30% on Wednesday.
EUR/USD technical analysis
EUR/USD´s daily chart is meeting the daily support and is capped by daily resistance. While on the backside of the prior bullish trend and resisted below 1.0700, the bias is for a break of the horizontal support of 1.0480 to open prospects of a move to 1.0450 ahead of the 200 DMA.
The hourly chart has seen the price resisted below a 50% mean reversion after piercing the horizontal support. If the bears commit, then a break of the support will put the -272% Fibo in focus near 1.0450.