Jakarta, GIC Trade – The euro currency on Thursday held on to mild gains and pared its biggest daily decline since September 2022 in previous trading.
 
Meanwhile, European central bank (ECB) policymakers tend to cite inflation concerns to justify a 50 bps interest rate hike. Where the guidance going forward will be crucial because of the crisis that occurred against Credit Suisse after the collapse in the US banking sector, as well as fears that financial market crackdowns such as 2008 could weigh on the euro. 
 
Bond market movements, ECB signals for future interest rate hikes and economic conditions will be crucial for the short-term direction.
 
The EUR/USD pair increased its bids to 1.0600 as it trimmed its biggest daily decline in nearly six months ahead of the European Central Bank (ECB) Monetary Policy Meeting. However, most major currency pairs remained sidelined in the last few hours as traders cast doubt on hawkish concerns about central banks in the wake of the Credit Suisse crisis.
 
On Wednesday, Reuters cited sources familiar with the matter, who reported that European Central Bank (ECB) policymakers were leaning toward a 50 basis point (bps) rate hike on Thursday. The news also said, "Despite the turmoil in the banking sector, policymakers expect inflation to remain too high in the Eurozone," adding that the Governing Council does not want to damage its credibility by throwing out a 50 bps rate hike.

It is worth noting that the refusal of the Saudi National Bank to put more funds into Credit Suisse prompted the Credit Default Swaps (CDS) of major European banks and triggered a crisis for financial markets on Wednesday. Further reinforcing the bad sentiment was the news that European Central Bank (ECB) officials contacted the bank to inquire about the exposure to Credit Suisse. 
However, the news that Credit Suisse will borrow up to CHF50 billion from the Swiss National Bank (SNB) to strengthen liquidity received great attention and allowed the EUR/USD bearish trend to come to a halt. 
 
Going forward, the ECB's reaction to the Credit Suisse crisis will be key for EUR/USD traders to watch as the bloc's central bank raises interest rates by 50 basis points (bps) are a completed deal. As a result, ECB President Christine Lagarde's Press Conference will become more important and could weaken the EUR/USD pair despite announcing a rate hike if it raises doubts about future rate hikes and economic conditions.
 
Fundamentally, the financial crisis that occurred at Credit Suisse could weigh on the euro currency. Then how technically, see the following analysis:
 
Technical Analysis

 
EUR/USD on the 1-hour period tried to move upwards touching the resistance area of 1.06059 towards the next resistance level at 1.06460. As for further bearish bias, EUR/USD needs to cross the support area at 1.05715 towards the next support level at 1.04020, which is also confirmed from the MA50 line which has crossed the MA100 line from above.
 
Forex Today Analysis is a fundamental and technical view used by the author, not a suggestion or a solicitation. To get more information click on the image below.