- The shared currency in the week is recording a loss of 0.12%.
- Ukraine – Russia tensions keep grabbing the spotlight amid diplomacy failure.
- EUR/USD path of least resistance is downwards and soon could break under the 1.1300 handle.
On Wednesday, the EUR/USD slides as Ukraine – Russian tensions increase as US intelligence officials reported that Russia could invade Ukraine within the next 24/48 hrs. During the day, the EUR/USD reached a daily high at 1.1358, but worsened market mood witnessed ebbs flowing to the greenback. At the time of writing, the EUR/USD is trading at 1.1309.
During the day, the Eurozone reported inflation figures for January, with headline HICP Flash annual based increased 5.1%, barely unchanged, while so-called Core HICP came at 2.3% as estimated. ECB speakers parade continued in the day. Most ECB officials commented about inflations, seeing upside risks on it, and it could remain higher than expected and for longer than thought. ECB Vasle commented that it is time to move towards a normal monetary policy.
On the US front, San Francisco Fed President Mary Daly emphasized the need to hike rates in the March meeting, though it is not clear how far the Federal Funds Rate needs to go and indicated that more than four rate hikes would be needed. Worth noting that analysts estimated the neutral rate to be somewhere around the 2.5% area.
In the meantime, the US Dollar Index, a measure of the greenback’s performance vs. a basket of six rivals, is up 0.18, sitting at 96.20, while the US 10-year benchmark note sits at 1.984%, up three and a half basis points, a headwind for the EUR/USD.
EUR/USD Price Forecast: Technical outlook
The EUR/USD is downward biased from a technical perspective. EUR/USD bull’s failure to hold above the 100-day moving average (DMA) at 1.1389 exposed the pair to a significant amount of selling pressure. That said, the EUR/USD path of least resistance is to the downside.
The EUR/USD first support would be 1.1300. Breach of the latter would expose February 3 low at 1.1267, followed by 2021 December 15, at 1.1221, and then the 1.1200 mark.
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