EUR/USD Trying to Decide at the 50 SMA After the Bounce
Financial markets have had a positive start to the new week, with risk trades recovering and the banking crisis showing signs of easing. The focus is likely to shift back to central banks and inflation, although there will still be attention on banks and the economy.
US futures initially dipped but have since risen, and European equities are on track for solid gains to start the final week of March trading. Bond yields are also increasing as traders reduce safety bets, and Treasury yields have jumped with Fed fund futures indicating a 64% chance of the Fed holding rates unchanged in May – down from 85% at the start of the day.
The USD has been mixed, trading lower against the Swiss Franc, CAD, and GBP while remaining relatively unchanged against the Euro and Aussie. The Yen has been the main laggard, with USD/JPY rising from 130.50 earlier to 131.75 during the European session as bond yields increased.
The H1 chart above in EUR/USD shows that the price reversed above 1.0930s, which shows that buyers were not convinced enough to take the price to 1.10. This pair declined until it reached a support level around 1.0720, which is where the 200 SMA (purple) also stood.
After reaching this moving average, EUR/USD started to bounce and approached a resistance level below 1.08 where buyers ran into the 50 SMA (yellow). If the price is unable to surpass this moving average today, it is likely that EUR/USD will reverse back down and re-test the support zone again. The chart setup is already looking bearish, with the previous H1 candlestick closing as a doji, which is a bearish reversing signal after the retrace higher. However, if the pair is able to break through the resistance level, it may approach its next resistance level at approximately 1.0830. We already opened a sell EUR/USD signal at the 50 SMA.
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