Dollar retreats ahead of a stacked week in EUR/USD

This week is Fed week, and another rate hike is on the horizon. However, it may not be as simple as it seems.

The EUR/USD rose on Friday as renewed bank jitters sparked fears that the US financial system may not be as stable as anticipated. The euro closed the day with a gain at $1.0664, but lagged behind the dollar in its weekly performance due to fears.

What transpired a week ago? An impending banking crisis threw investors for a loop as First Republic Bank collapsed under selling pressure and Credit Suisse pleaded with its larger rival UBS to acquire it so it could survive. Mixed US data also contributed to the confusion.

Down the line, the EUR/USD has a solid week. The lightning strikes on Wednesday, as the Federal Reserve prepares to announce its most recent interest rate decision. Before the market turmoil, the Fed had planned a 25 basis point increase. However, some speculate that the central bank may hold off for the time being.