Euro hits fresh 2023 highs on improved sentiment

The shared currency has advanced against the US Dollar during Wednesday’s US session after an upbeat Wall Street open put paid to lingering recession fears. Stronger tech company earnings from Alphabet and Microsoft suggest advertising revenue remains high, offsetting recession fears. The EUR/USD pair is trading at 1.1043 at the time of typing.

The trend remains bullish according to technical analysis with a decisive break above 1.1075 opening the way to the 1.11s.

Sentiment improves after strong tech earnings releases from Alphabet and Microsoft suggest companies are still spending on online advertising, and the news that ailing lender First Republic Bank is mulling over whether to sell $100B of its loans resurrects banking-crisis fears.

Lower-than-expected US Consumer Confidence figures for April eclipse higher-than-expected New Home Sales and were viewed as evidence of a possible impending US recession.

The Euro has been supported by overall hawkish comments from ECB officials. The ECB’s chief economist Philip Lane has said interest rates will rise at the May 4 meeting, but whether beyond that depends on the data.

Strong first quarter earnings by European banks due to higher interest margins suggest the BLS may paint a favorable picture. The US Dollar is at a disadvantage since Federal Reserve (Fed) officials are in the two-week blackout period before the May 4 meeting. The key data release for the US Dollar on Wednesday was March Durable Goods Orders, which showed substantial higher-than-expected gains. For the Euro, the main release was German Consumer Confidence Gfk in May, which came out at -25.7.