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EURUSD Development of an Uptrend in the Near Future

3/29/2023 9:48 AM

The EUR/USD pair is relatively stable, holding near 1.0835 and local highs from March 23. The euro is in anticipation of new drivers; however, in general, it has maintained a "bullish" momentum since the beginning of the week.

Analysts revised their forecasts regarding the development of the banking crisis in the US and Europe, suggesting that the US Federal Reserve and the Treasury Department still managed to stabilize the situation. On Monday, March 27, it became known that the American bank First Citizens BancShares Inc. agreed to buy most of the loan portfolio of the previously closed Silicon Valley Bank (SVB), which should reduce the burden on insurance companies. However, the Federal Deposit Insurance Corporation (FDIC) will still suffer significant losses of at least 20.0 billion dollars. In turn, the Governor of the Bank of Spain and member of the board of the European Central Bank (ECB), Pablo Hernandez de Cos, said that the uncertainty caused by global banking turmoil could lead to a constant increase in the cost of financing for Spanish lenders and an increase in the size of their reserves.

A large German bank Deutsche Bank AG, which attempted corrective growth at the beginning of the week, tried to continue the "bullish" dynamics at the trading on Tuesday, but closer to the close of the day's session, the "bears" seized the initiative. The Chair of the Supervisory Board of the European Central Bank (ECB) Andrea Enria noted that the regulator is concerned about the situation with the largest financial institution in the eurozone, as it reflects the ongoing tension among investors, and even weak dynamics in the small market for credit default swaps could become a catalyst for the redirection of capital from deposit accounts.

Meanwhile, the position of the euro was also supported by macroeconomic statistics from Germany on the level of economic expectations. The index of Business Optimism from the Institute for Economic Research (IFO) rose from 91.1 points to 93.3 points in March with a forecast of 90.9 points, and the indicator of Economic Expectations rose from 88.4 points to 91.2 points, which also turned out to be better than the expected decline to 88.0 points. Similar statistics will be released tomorrow in the eurozone.

Bollinger Bands in D1 chart show moderate growth. The price range expands, freeing a path to new local highs for the "bulls". MACD is growing preserving a weak buy signal (located above the signal line). Stochastic, which was actively developing downward dynamics at the end of last week, is reversing upwards, signaling in favor of the development of an uptrend in the near future.

Resistance levels: 1.0850, 1.0900, 1.0957, 1.1000. | Support levels: 1.0800, 1.0758, 1.0700, 1.0640.

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