EUR/USD Forecast: Crash below 1.18 coming? Dollar fueled by data, euro pressured by vaccine issues

Easter is around the corner – but it is unlikely to be a happy holiday, even in Germany, where the government backtracked on special restrictions that had been planned. Concerns about rising cases in the old continent and the sluggish vaccine campaign are left, right, and center for EU leaders convening in the next few hours.

If they point fingers at AstraZeneca and the UK – and take further steps such as halting shipments of vaccines – pressure on the euro would intensify. On the other hand, a more conciliatory approach – in line with the initial statement about a win-win for both sides – would be positive for the common currency. The summit may go into the night. 

EUR/USD has been under pressure also from flows into the safe-haven dollar. Concerns about Europe and also about disruption to global shipping due to a stranded ship in the Suez Canal have been weighing on sentiment. 

The greenback is also benefiting from upbeat figures. US Gross Domestic Product was upgraded from 4.1% to 4.3% annualized in the final read for the fourth quarter of 2020. More importantly, jobless claims dropped to 684,000 in the week ending March 19, exceeding expectations as well. 

Apart from the EU Summit, investors await more details about President Joe Biden's massive infrastructure plans that will be officially presented next week. If Biden goes big, the dollar has more room to rise. 

All in all, pressure on EUR/USD is set to continue.

EUR/USD Technical Analysis 

The Relative Strength Index on the four-hour chart is just above 30 – thus outside the oversold territory. That, alongside downside momentum, is fueling the bears. 

The round 1.18 level is critical support and it is followed by 1.1750 and 1.1690, which were in play in November 2020. 

Resistance awaits at 1.1836, followed by 1.1875 and 1.19.