On the daily chart below, we can see that with all the fears around the banking sector the sellers couldn’t break below the 1.0533 support. Recently, the Euro sold off as fears from the US spread to Europe with Credit Suisse under pressure. The SNB the same day offered the bank support and as happened for the US, the fears started to dissipate and switched the sentiment from risk off to risk on.
This weighed on the US Dollar, which is favoured when there’s a flight to safety, and the price rebounded. Yesterday, the ECB went through with the 50 bps hike but refrained from signalling the next move as they want to see how everything evolves in the next weeks. In the short term this is giving the Euro some support thanks also to the general risk on sentiment.
On the 4 hour chart below, we can see that the 1.0533 support is a meaningful one, so a future break below that level will be significant for the sellers. For now, the buyers seem to be in control as the price has almost erased the entire selloff from the Credit Suisse scare.
The buyers may want to wait for a break above the 1.07 handle to start targeting the 1.08 resistance, which will also be the last line of defence for the sellers.
On the 1 hour chart below, we can see more closely the recent price action. The Credit Suisse troubles made the price to break the rising wedge pattern and the sellers piled in as a consequence, extending the selloff. Then we got the bounce from the 1.0533 support and now the price is at the 61.8% Fibonacci retracement level of the entire downward move.
A break above, would give the buyers more conviction for a rally towards the 1.08 resistance. The sellers may lean on this level as the first line of defence. In case we get a pullback towards the trendline, the buyers will lean on that with defined risk, while the sellers will look at a break below to start piling in looking for a breakout of the 1.0533 level.
