EUR/USD bulls cheer SVB-led risk-on mood, easing hawkish Fed bets to cross 1.0700, US inflation, ECB eyed

• EUR/USD prints three-day uptrend as firmer sentiment weighs on the US Dollar.
• US regulators’ efforts to tame financial markets risk from SVB, Signature Bank favor risk profile on Monday.
• Friday’s US employment data failed to impress US Dollar bulls as the previous risk-aversion drowned yields.
• US CPI, ECB eyed for clear directions, consumer-centric data also appear important to watch.

EUR/USD rise to the highest levels in three weeks as an upbeat risk profile favors bulls amid early Monday. That said, the Euro pair advances nearly half a percent on a day to 1.0715 as it prints a three-day winning streak at the highest levels in three weeks with eyes on Thursday’s European Central Bank (ECB) monetary policy meeting, as well as Tuesday’s US Consumer Price Index (CPI).

US Treasury Department, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) took joint actions to tame the risks emanating from the SVB and Signature Bank during the weekend.  “All depositors of Silicon Valley Bank and Signature Bank will be fully protected,” said the authorities in a statement released afterward. While reacting to the US regulators’ actions, US President Joe Biden said, “American people and American businesses can have confidence that their bank deposits will be there when they need them.”

It should be noted that China’s dislike for the US interference in Taiwan matters and the better-than-expected US Nonfarm Payrolls (NFP) seem to probe the risk-on mood ahead of this week’s top-tier data/events.

On Friday, the US Nonfarm Payrolls (NFP) grew more than 205K expected to 311K in February, versus 504K (revised), while the Unemployment Rate rose to 3.6% for the said month compared to 3.4% expected and prior. Further, the Average Hourly Earnings rose on YoY but eased on monthly basis for February whereas the Labor Force Participation increased during the stated month. The data, however, failed to impress the US Dollar buyers as the market’s risk-off mood drowned the US Treasury bond yields and the greenback.

It’s worth observing that the market’s fears of no Fed rate hikes in March, due to the latest imbalance in the US banking sector due to the SVB and Signature Bank fallout, also seem to weigh n the US Dollar.

Amid these plays, S&P 500 Futures bounced off a 2.5-month low, up nearly 1.0% around 3,905 by the press time whereas the US Treasury bond yields recover from the monthly low, after posting the biggest daily loss of the year 2023 on Friday.

Moving on, market plays may witness a sluggish session on Monday amid a cautious mood ahead of top-tier data/events. That said, the ECB is likely to announce a 0.50% rate hike and can join the latest risk-on mood to propel the EUR/USD price. Though, strong prints of the US consumer-centric data and inflation may renew hawkish Fed bias and can exert downside pressure on the major currency pair moving forward.

Technical analysis

The EUR/USD pair’s higher highs on price fail to gain support from the Relative Strength Index (RSI) 14 as it forms a lower high, which in turn suggests a lack of enough bullish momentum to cross the immediate key hurdle, namely the 200-SMA level surrounding 1.0710.