📉EUR is falling by more than 2% amid the negative in the European banking sector

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• The fire has spread to the European banking sector 
• If Switzerland’s second-largest bank goes down, the problems will be very significant.
• ECB rate decision expected tomorrow
• EUR/USD falls and is likely to continue its downward movement
• The rate decision and EURUSD fixing below 1.0550 – 1.0590 will help decide on sell trades.

The fire in the banking sector has spread to Europe. While serious problems are observed with the bank Credit Suisse, which, by the way, denies everything. But investors are not reassured by this. Following Credit Suisse, the decline began in other stocks of European banks.

Exactly 10 years ago, banks were already being rescued in Europe at the expense of depositors. Then, on March 16, 2013, Cyprus had problems. The Eurogroup has decided to introduce a one-time tax on all bank deposits in the country as a prerequisite for receiving assistance from the EU to save the banking sector of Cyprus. Then it led to a 5-month decline in EUR. Credit Swiss is the second largest bank in Switzerland, and its assets exceed $1.5 trillion. If something really happens to this bank, then the problems will be much more serious than Silicon Valley in the USA and it will be very difficult to solve them.

Today, data on inflation in France were published, which indicate an acceleration of inflation (+1.1% in dynamics m/m, up to 6.3% in annual terms). The ECB rate decision will be announced tomorrow. According to analysts’ forecasts and statements by ECB representatives, an increase of 0.5% to 3.5% is expected. All this was supposed to support EUR, but, as we can see, this did not happen.

The ratio of buyers and sellers indicates a preponderance of the former: 64.5% of buyers versus 35.5% of sellers, which indicates the likelihood of a continuation of the downward movement.

In technical terms, the EUR/USD rate fell to the support level in the range of 1.0550 – 1.0590, blocking all growth since March 9, 2023. The price is testing this level for the 4th time in 2023.

Today’s EUR decline is a reassessment of expectations. At the moment, the market is laying an increase of 0.1% instead of 0.5%. The ECB itself is hastily engaged in assessing the state of Credit Suisse. If the regulator does not change its decision tomorrow and still raises the rate by 0.5%, then EUR can just as sharply recoup today’s losses and the level of 1.0550 – 1.0590 will stand. 

But if the current problems force the regulator to abandon this idea, then the level may not stand. It is worth making a decision on selling transactions after the ECB’s decision on the rate and fixing the EUR/USD below 1.0550 – 1.0590. I would not consider purchases in the current situation, at least with the current introductory.