- EUR / USD remains exposed to further downside risks.
- The USD takes a breather, but returns are still supported by the bullish Fed.
- The eurozone energy crisis will weigh on the pair amid a break to the downside on the daily chart.
EUR / USD is reversing the rebound of the Asian session, as risks remain tilted to the downside amid the optimistic Fed turnaround and the euro zone energy crisis.
The latest upbeat comments from Fed officials continue to bolster expectations of monetary policy normalization earlier than expected, pushing US Treasury and USD yields higher.
Meanwhile, Europe struggles with rising oil and gas prices, which has caused energy shortages across the old continent, leading to factory closures and fueling economic growth concerns. This will likely continue to bode ill for the euro.
The pair maintains its range below the 1.1700 level, awaiting speeches from Fed Chairman Jerome Powell and ECB Chairman Christine Lagarde for a new direction in price.
The EUR / USD daily chart continues to indicate downside risks, especially after the price marked a daily close below the critical uptrend line support at 1.1685.
The 14-day RSI continues to trend below the midline, suggesting that there is more room for the decline.
A confirmed bearish crossover in said time frame, with the 21-day moving average after cutting the 50 SMA from above, adds credibility to the bearish bias.
Thus, EUR / USD bears are looking for a sustained break below 1.1664, the August lows, which could extend the decline to 1.1650.
The next relevant support awaits at 1.1600, a round level.
EUR / USD daily chart
On the other hand, recovering the previous support now converted into resistance at 1.1685 is essential to achieve the recovery towards 1.1700.
Higher up, strong resistance could appear around 1.1750, where Monday’s high is located.
EUR / USD additional levels
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