EUR/USD is downward pressured as bears eye the YTD low at 1.0806

The EUR/USD remains under selling pressure after falling below the 1.1000 mark, as hawkish Federal Reserve commentary and escalation of the Russia-Ukraine war turned sentiment sour on Tuesday. At press time, the EUR/USD is trading at 1.0905, as EUR bears prepare for a renewed test of 1.0806 YTD low.

Market sentiment remains downbeat, as portrayed by falling US equities. The greenback remains buoyant, extending its rally to four days, rising 0.50%, sitting at 99.485, after reaching a new YTD high at 99.524.

Tuesday’s Fed parade lifts US Treasury yields

On Tuesday, Fed policymakers crossed wires. Fed Governor Lael Brainard stated that the Fed “is prepared to take stronger action” if needed and added that the balance sheet reduction might begin in the May meeting. On those remarks, US equities slid, and the US Dollar Index reclaimed the 99.000 level.

Elsewhere, Kansas City Fed President Esther George (voter 2022) said that a 50 bps move would be an option, as conditions favor going faster than before. Later, San Francisco Fed President Mary Daly commented that the labor market is extremely tight and noted that the Fed is on a path to raising rates. Daly added that growth would slow but expected it to be a short-lived event.

Meanwhile, conditions around the Ukraine-Russia conflict continue to worsen. Germany and France expelled Russian diplomats from their embassies, responding to Russian troops’ war crimes committed in Bucha once the Russian soldiers moved east.

The US and the G7 are coordinating new sanctions on Russia, expanding to financial institutions, state-owned companies in Russia, and unspecified Russian officials and their family members.

Data-wise, the Eurozone economic docket featured March’s IHS Markit Services PMIs for countries in the EU, and the Eurozone, which rose firmly. Regarding the US economic docket, March’s US ISM-Non Manufacturing PMI rose to 58.3, higher than the 58.1 estimated and better than the 56.5 from the previous reading.

EUR/USD Price Forecast: Technical outlook

The EUR/USD remains in a downtrend, as depicted by the daily chart. On Monday, the EUR/USD was unable to trade above Pitchfork’s mid-line between the top/central parallel line, around 1.1054, exposing the pair to further selling pressure. Subsequently, the EUR/USD extended its fall, and a break below 1.0900 could pave the way for further losses.

That said, the EUR/USD first support would be 1.0900. Breach of the latter would expose Pitchfork’s central-parallel line around 1.0850-70 range, followed by the YTD low at 1.0806.