- On Tuesday, the shared currency trims some of Monday’s losses, rising 0.07%.
- Risk appetite increased, despite the continued escalation of the Russia-Ukraine conflict and an aggressive Fed line.
- EUR/USD Price Forecast: Downside Bias Below 1.1100.
After two days of losses in the American session, the shared currency rises amid a risk-on market mood and a firmer dollar. At the time of writing this article, the EUR/USD trades at 1.1025.
Financial market sentiment is upbeat, as reflected in global equities. The dollar was almost flat during the day, as shown by the US dollar index, which after reaching a daily high of 98.97, fell back towards 98.489, for a minimum gain of 0.01%. Meanwhile, US Treasuries continue to advance for the second day in a row, led by the 10-year Treasury yield, which gains six basis points to 2,377%.
Fed and ECB speeches make headlines
On Monday, Fed Chairman Jerome Powell said the US central bank would take “necessary steps” to control inflation towards the 2% target. He stressed that he favors 50 basis point hikes, pretty much in line with what other Fed policymakers have said.
On Tuesday, Fed members continued. James Bullard of the St. Louis Fed said the Fed needs to neutralize policy, saying “faster is better” and reiterated that 50 basis point hikes would be on the cards.
Later, Mary Daly of the San Francisco Fed said inflation is too high and two supply chain crises push it “much higher.” She added that it is time to remove accommodation, move towards neutral and determine if the US central bank would need to go above as it does not see 2% inflation by 2022.
On the other hand, the economic agenda of the Eurozone included some speakers from the European Central Bank (ECB). Luis de Guindos of the ECB said that the possibility of stagflation could be ruled out. Later in the European session, Francois Villeroy said the ECB should take a cautious approach to normalizations while focusing on underlying prices over the medium term.
Meanwhile, ECB President Madame Lagarde said bottlenecks, energy and food were driving short-term inflation, adding that the Ukraine war would have consequences for euro zone growth.
EUR/USD Price Forecast: Technical Outlook
The EUR/USD bias is to the downside, although on Tuesday, EUR/USD jumped from daily lows around 1.0969 and broke above the 1.1000 level, exposing the midline between the parallel upper and middle Pitchfork lines around 1.1080- 90. However, the downtrend remains intact unless EUR/USD bulls push the pair above 1.1100, which could pave the way for further gains.
The first support for the EUR/USD would be the 1.1000 mark on the downside. A breach of the latter would expose the parallel central Pitchfork line, also converging near 1.0900, which once cleared would open the door towards the March 7th annual low at 1.0806.
Source: Fx Street
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