|

EUR/USD Forecast: Key levels stay intact amid geopolitical uncertainty

  • EUR/USD has been trading in a very narrow range on Friday.
  • Market mood is improving on reports claiming Russia is withdrawing troops.
  • US President Joe Biden will host a meeting with international leaders on the Russia-Ukraine conflict. 

EUR/USD has been having a tough time making a decisive move in either direction as investors try to navigate through mixed headlines surrounding the Russia-Ukraine conflict. The pair needs to break out of the 1.1350-1.1400 range to determine its next short-term direction.

In a letter to the UN Secretary-General, Russia reiterated its claim that Ukraine had committed war crimes in Donbas. Commenting on this development, US Secretary of State Anthony Blinken told the UN Security Council that Russia was manufacturing a pretext for an attack on Ukraine. The greenback, however, failed to capitalize on the risk-averse market environment as it struggled to find demand amid slumping US Treasury bond yields.

Early Friday, Ifax news agency reported that Russia's mechanised infantry units were heading back to their bases after completing drills in Crimea. This headline allowed risk flows to return to markets in the European morning but EUR/USD stayed relatively quiet as the west is yet to confirm a de-escalation of the situation.

Later in the day, US President Joe Biden will host a meeting on the Russia-Ukraine conflict with leaders of Canada, France, Germany, Italy, Poland, Romania, Britain, the EU and NATO.

Further escalation of geopolitical tensions could make it difficult for EUR/USD to edge higher ahead of the weekend. Although a negative shift in risk sentiment could provide a boost to the dollar, another leg lower in US T-bond yields on risk aversion could limit the currency's gains and help EUR/USD find support.

The European Commission will release the preliminary February Consumer Confidence data for the eurozone and the January Existing Home Sales will be featured in the US economic docket

EUR/USD Technical Analysis

On the four-hour chart, EUR/USD is trading within a symmetrical triangle and the Relative Strength Index (RSI) indicator is moving sideways around 50, highlighting the pair's indecisiveness.

On the upside, 1.1400 (psychological level, Fibonacci 23.6% retracement of the latest uptrend) aligns as the first technical resistance. In case this level turns into support, 1.1450 (static level) and 1.1480 (static level) could be targeted.

Significant support seems to have formed at the 1.1340/1.1350 area (Fibonacci 38.2% retracement of the latest uptrend, 200-period SMA and 100-period SMA). The bearish pressure could gather strength below that level and the pair could extend its slide toward 1.1300 (psychological level, Fibonacci 50% retracement).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to PremiumSign In

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

By subscribing you agree to our Terms and conditions.

Editor's Picks

EUR/USD comes under pressure near 1.1600

EUR/USD is now facing increasing selling pressure, abandoning the area of recent daily highs and refocusing on the 1.1600 region amid decent losses for the day. The pair’s correction comes in response to the acceptable bounce in the US Dollar, while traders gear up for upcoming key data releases in the US.

GBP/USD recedes to 1.3140 on USD rebound

GBP/USD remains on the back foot on Friday, retreating to the 1.3140 region on the back of the marked upside impulse in the Greenback. In the meantime, worries about the UK’s fiscal discipline and political stability keep the British Pound under scrutiny, weighing on Cable. Adding to the noise, reports suggested PM Starmer and Chancellor Reeves have shelved plans to raise income tax rates.

Gold meets some contention just above $4,000

Gold trade with heavy losses, approaching the key $4,000 mark per troy ounce on the back of the marked bounce in the US Dollar, higher US Treasury yields across the curve and fading expectations for a Fed rate cut in December.

Crypto Today: Bitcoin, Ethereum, XRP sell-off persists amid low institutional and retail demand

Bitcoin is trading above $97,000 at the time of writing on Friday amid a sticky bearish wave in the broader cryptocurrency market. The sell-off extends to altcoins, with Ethereum and Ripple hovering below $3,200 and $2.30, respectively.

Weekly focus: Looking towards post-shutdown US data

The end of US government shutdown was not enough to drive a lasting recovery in markets' risk appetite, with equity and bond markets weakening towards the end of the week.

VeChain mainnet upgrade shifts consensus mechanism from PoA to DPoS as VET extends decline 

VeChain holds above $0.0150 as overhead pressure signals a 15% downside risk. VeChain migrates from Proof of Authority to Delegated Proof of Stake to power the network’s next growth phase.