EUR/USD: The Euro falls as European Banks Are Hit

The EUR/USD pair was in for its worst day of the year due to Credit Suisse's problems, which caused the euro to fall.

On Wednesday, the EUR/USD exchange rate fell as much as 2.3%, or 254 pips, to hover near $1.05 – the lowest level for the pair in 2023. Despite recovering some of its losses, the euro had its worst trading session of the year, losing 1.44 percent, or 155 basis points, against the stronger dollar.

A Credit Suisse-initiated selloff of bank stocks was the catalyst for the sharp decline. The Swiss-based lender lost a prominent Saudi backer and short sellers piled into its stock, resulting in a 27% decline, before the Swiss central bank allayed fears by announcing it will provide up to $54bn in loans.

The euro's losses were further erased on Thursday, but pressure remains as European banks strive to extinguish the dumpster fire caused by Credit Suisse's potential bankruptcy or acquisition by a rival bank. Today, the EUR/USD reached a daily high near $1.0630.