24 July 2023, EUR/USD
EURUSD trading plan:
A feared liquidity drainage in the U.S. banking system as the Treasury refills its coffers has not materialised yet, on the contrary reserves increased recently, assuaging some concerns the bond spree could lead to further credit tightening. The U.S. Treasury started rebuilding its account through T-bills after the government's debt ceiling was suspended last month. Since early June, the Treasury General Account at the Fed has increased by about $460 billion. Generally, an increase in government borrowing coincides with a decline in demand for the Fed's overnight reverse repo facility, through which money market funds lend to the Fed, or with a drop in bank reserves parked at the central bank. When banks absorb the new debt issuance, they have less money to lend - a scenario which had some investors worried given ongoing fears of excessive credit tightening amid higher interest rates.
Investment idea: range 1.1070 -1.1170.
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