EUR/USD Forecast: Bears in control amid Eastern Europe crisis

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0962

Mounting tensions between Russia and western nations dent the market’s mood.
Central banks rush to tighten monetary policies, doing too little, too late.
EUR/USD is technically bearish and could retest the year low at 1.0805.

The EUR/USD pair consolidates losses near a fresh weekly low of 1.0955, undermined by mounting tensions in Eastern Europe. Ukraine’s President Volodymyr Zelenskyy noted that there is a chance he would not meet with Russian leader Vladimir Putin amid the war crimes committed in Bucha. European nations and the US keep announcing more sanctions are coming, while the EU is studying a ban on coal imports from Russia.

Meanwhile, inflation soars, supply chain issues worsen, and central banks accelerate tightening, although there’s a generalized sense that they are doing too little, too late. Stocks are down while government bond yields advance, reflecting the worsening market sentiment.

The final readings of the March EU S&P Global Services PMIs suffered minor revisions, although the German’s and the Union’s indexes were upwardly revised. As for the US, it released the February Goods and Services Trade Balance, which posted a deficit of $89.19 billion, larger than anticipated. Later today, the country will publish the S&P Services PMI and the official ISM index, the latter foreseen at 58 in March, up from the previous 56.5.

EUR/USD short-term technical outlook

The EUR/USD pair is unchanged daily basis, confined to a tight 30 pips range, around the 23.6% retracement of this year’s decline. In the daily chart, the Momentum indicator heads firmly lower within negative levels, while the RSI indicator stabilized around 42. At the same time, the pair is developing below its moving averages, all of which skews the risk to the downside.

The 4-hour chart shows that the pair is also developing below its moving averages, with the 20 SMA heading firmly lower, indicating increased near-term selling interest. Technical indicators are directionless within negative levels, reflecting the ongoing consolidation. Nevertheless, chances are of another leg south amid the dismal market mood.

Support levels: 1.0920 1.0870 1.0835

Resistance levels: 1.1015 1.1070 1.1115

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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