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ECB Officials Confirmed the Need to Raise Interest Rates

3/30/2023 1:38 PM

This week, the EUR/USD pair resumed growth and is now testing the 1.0864 mark (Murray level [5/8]).

Currently, the situation has somewhat stabilized, especially since the authorities have promised support to troubled creditors, but most experts believe that risks to the US financial system still remain. It is believed that the greatest threat may be a massive outflow of deposits from regional banks to large ones, which may complicate lending to small businesses and create additional pressure on the economy. US Fed officials are already discussing the possibility of suspending the cycle of tightening monetary policy in the event of a deterioration in the situation, which supports alternative dollar assets.

Under these conditions, the European currency looks more preferable for investment, especially since officials, unlike their American counterparts, have not yet announced a pause in tightening monetary policy, citing high inflation. So, the Chief Economist of the European Central Bank (ECB) Philip Lane said that the risks to the banking system will soon be leveled, after which the interest rate increase will need to continue. Isabel Schnabel, a member of the regulator's board, noted that core inflation in the eurozone is still stable, despite the fall in energy prices, and may not decline as quickly as previously thought, which also implies the need to continue adjusting the value.

Technically, the price is close to 1.0895 (Fibo retracement 50.0%), with a breakout of which further growth to the levels of 1.0986 (Murray level [6/8]) and 1.1108 (Murray level [7/8]) is possible. The key support zone for the "bears" is 1.0742-1.0710 (Murray level [4/8], the middle line of the Bollinger Bands), its breakdown will give the prospect of a decline to the levels of 1.0587 (Fibo retracement 38.2%) and 1.0500 (Murray level [2/8], the lower line of the Bollinger Bands), however, this movement option is seen less It is likely, since technical indicators point out the continuation of the upward trend: the Bollinger Bands and the Stochastic are reversing upwards, the MACD histogram is increasing in the positive zone.

Resistance levels: 1.0895, 1.0986, 1.1108. | Support levels: 1.0710, 1.0587, 1.0500.

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