The euro's growth, as well as other counter-dollar currencies, while the stock market is falling is a delayed response. Of course, this is due to investors' worries about the Federal Reserve's easing of the monetary policy due to the start of the banking crisis - the bankruptcy of Silicon Valley Bank, the 16th largest bank by capitalization in the U.S.. Traders see an 82% likelihood of a quarter-point rate hike at the next Fed meeting.
If we go back to 2008, then the crisis began with the bankruptcy of the investment bank Bear Stearns (ironically - on March 14, and 2 days later it was bought by JPMorgan Chase for a whopping $236 million). But in the spring of 2008, besides Bear Stearns, about 10-15 banks went bankrupt, and this had almost no effect on the markets, the optimism of unbridled growth was so great, and oil was already approaching $120 per barrel (a record of 147.27 WTI in July 2008).
But now the Fed's response to Silicon Valley Bank's bankruptcy was swift, providing credit financing to all needy banks for 1 year. But if the banks "go bust," this is already a crisis, and the dollar will rise on it.
In the current situation, the dollar may be helped by today's U.S. inflation data. The core CPI for February is expected to rise by 0.4%, on an annualized basis it may decrease to 5.5% from the previous 5.6%. Overall CPI for the month may also show an increase of 0.4%, and in annual terms may be down to 6.0% from 6.4% y/y in January. Earlier we wrote that CPI at 6.0% is high enough and unlikely to be able to influence a softening of the FOMC stance. Now we can add to that that the Fed does not believe in a crisis either. We think the markets have rushed to the other extreme, forgetting to think about a 0.50% rate hike at the next central bank meeting.
So, this morning the EUR/USD pair turned down, without reaching the target range of 1.0758/87. Perhaps this is no longer necessary, since yesterday, according to brokers, the stops above 1.0700 were knocked out of the market. The signal line of the Marlin oscillator is already turning down on the daily-chart. Now, the price may fall under 1.0660 and finally close Monday's gap. The second target is 1.0595.
On the four-hour chart, the Marlin oscillator is preparing a relatively strong pivot. But in order to confirm the reversal it is necessary to overcome 1.0660. Let's wait and observe.