- EUR/USD fluctuated during the trading session on Thursday, but is up 0.14% on the week.
- Risk aversion in financial markets remains unless tensions between Ukraine and Russia ease.
- EUR/USD has a neutral bias, but downside risks remain as long as the pair remains below 1.1400.
On Thursday, amid rising tensions in the Russia-Ukraine crisis, the shared currency falls 0.04% during the North American session. At the time of writing this article, the EUR/USD it trades at 1.1367. The financial market mood remains negative. In the Asian session, EUR/USD witnessed a 58 pip drop on “reports” that Ukrainian forces fired grenades, which officials later denied. After that headline, the pair stabilized and headed higher to stop around the 200 hourly simple moving average (SMA) at 1.1363.
Headlines controlled by the conflict between Russia and Ukraine
In an update on the Eastern European conflict, Russia stated that Ukraine committed war crimes in Donbas, as stated in a letter to the UN. Meanwhile, the US raises the possibility of Russia’s “false flag” operation as a “pretext” to invade Ukraine. In the last hour, the White House reiterated its commitment to diplomacy, in the words of US Secretary of State Blinken at the UN.
The ECB and the Fed will give statements
Earlier in the American session, ECB Chief Economist Philip Lane made remarks. He said “the key message from the February meeting was that risks to inflation are tilted to the upside in the near term,” according to Reuters. Lane added that “if there is a threat of inflation settling above two percent in the medium term, while also making sure not to overreact to the extent that there is a risk of high inflation in the short term may induce excessive monetary tightening that pushes inflation persistently below the two percent target in the medium term.”
Meanwhile, St. Louis Fed President James Bullard reiterated that he would like 100 bps of rate hikes by July 1, adding that he is “losing faith” that inflation can subside. Bullard stressed that an aggressive rate hike would signal that the US central bank is “serious” about controlling inflation. In addition, he added that the Fed “may have to go beyond the neutral rate to control prices.”
The US macro economy filed initial jobless claims, rising 248,000 more than the 219,000 for the week ending February 19. At the same time, building permits rose to 1.899 million better than the 1.76 million forecast, while the Philadelphia Fed manufacturing index fell from 16 to 20.
EUR/USD Price Forecast: Technical Outlook
EUR/USD has a neutral bias and is facing strong resistance with the 100-day moving average (DMA) at 1.1400, along with the upper Pitchfork trend line around 1.1400. A clear break would expose the Feb 11 daily high at 1.1430, followed by the Feb 10 cycle high at 1.1494.
On the other hand, the first support for the EUR/USD would be the 50 DMA at 1.1329. A break of the latter would expose 1.1300, followed by the daily low of Feb 14 at 1.1279. Once cleared, the next bottom for the EUR/USD would be the Jan 28 pivot low at 1.1120.
Technical levels
Source: Fx Street
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