- The shared coin starts the week off on the wrong foot, down 0.28%.
- The conflict between Ukraine and Russia intensifies amid the lack of talks at the Foreign Ministry level.
- EUR/USD Price Forecast: Still under pressure to the downside, and a daily close below 1.0806 would exacerbate a move to 1.0636.
The EUR/USD extends its losses in the American session after the Good Friday holiday, down 0.33%, trading below the cycle low of March 7 at 1.0806, opening the door to more losses amid a risk-off mood in the market. At the time of writing, the EUR/USD is trading at 1.0775.
Geopolitics and the divergence between the ECB and the Fed are an obstacle for the EUR/USD
Geopolitics and speeches from the Fed continue to scare investors. Ukrainian President Zelenskyy said talks with Russia are at a “dead end” and stressed that Ukraine will not trade with its territory and people. He added that if Russian forces go ahead and destroy the remaining troops in Mariupol, it will “end” the talks. Ukrainian Foreign Minister Kuleva said that there has been no recent contact at the Foreign Ministry level in recent weeks.
Aside from this, last week’s decision by the ECB to keep rates unchanged and fail to deliver a long-awaited “aggressive hold” by investors weighed on the shared currency, which eventually broke below 1.0806, hitting a yearly low in 1.0757. In contrast, STIR shows that the odds of a 50bp rate hike by the Fed are at 98%, which was confirmed by Fed speakers at end of last week.
On April 14, New York Fed President John C. Williams (voter, neutral) noted that a 50bp rate hike is a reasonable option, but the pace of rate hikes will depend on the trajectory of the economy. Williams added that the Fed needs to move “quickly” to normal and more neutral policy levels.
An absent economic docket from the EU and US would leave traders leaning on Fed intervention, with St. Louis Fed President James Bullard crossing wires near the end of the New York session.
Also read: EUR/USD trades flat near 1.0800 on quiet start to week, though bearish themes remain in focus
EUR/USD Price Forecast: Technical Outlook
EUR/USD’s technical outlook remains unchanged, slanted to the downside, albeit under downward pressure, once it broke above the March 7 cycle low at 1.0806. The daily moving averages (DMAs) are still above spot price with the 50 DMA at 1.1522 poised to cross below the 200 DMA which would form a death cross, which indicating increased selling pressure.
That said, the first support for the EUR/USD would be the yearly low at 1.0757. A decisive break would expose the April 2020 low at 1.0727, followed by the March 2020 cycle low at 1.0636.
Technical levels
Source: Fx Street
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