Forex Fundamental Analysis – The banking crisis


EURUSD trading plan:

Expectations for the U.S. central bank’s next move have swung wildly in recent days, after the sudden failure of two regional banks late last week triggered alarm about the health of the banking system and raised doubts about how much further the Fed may take what has been an aggressive fight against stubbornly high inflation. After the failure on Friday of Silicon Valley Bank and on Saturday of Signature Bank, the Fed created an emergency program to guarantee deposits and try to stem further financial contagion. That prompted futures traders to slash their rate-hike expectations, only to partially reverse those bets on Tuesday after a report showing inflation is cooling far too slowly for comfort. Now, with the banking crisis seemingly rekindled and banking stocks again under pressure, traders are looking for one more Fed rate hike if that, and then a string of interest-rate reductions, with the rate ending this year in a 3.5%-3.75% range.

Investment idea: buy 1.0570 and take profit 1.0700.

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