- Despite multiple attempts so far this session, EUR/USD has not been able to break back above the 1.1000 level.
- The euro shrugged off strong Eurozone PMIs with traders concerned about Russia’s new demand for energy payments in roubles.
- The strong buck amid the Fed hawkish shift and safe-haven demand is also weighing on the pair.
Despite multiple attempts so far this session, EUR/USD has not been able to break back to the north of the 1.1000 level and is currently trading closer to session lows in the 1.0980 area, down about 0.25% on the day. The pair saw some strength in early European trade as a result of stronger than forecast flash Eurozone PMI figures for March, but this euro strength was short-lived, with traders very much still focused on the Ukraine war. The risks of an energy crunch in Europe has risen after Russian President Vladimir Putin announced on Wednesday that unfriendly countries (including the EU) would have to purchase Russian energy (including gas) in roubles.
EUR/USD also finds itself weighed down by a broadly stronger US dollar which 1) reflects safe-haven demand amid the ongoing Ukraine crisis and 2) reflects the recent hawkish shift in Fed communications and subsequent move higher in US yields. With the 21-Day Moving Average (now at 1.1034) continuing to act as a strong level of resistance, EUR/USD downside at this point feels more likely than a sustained break back towards last week’s highs in the 1.1100s. Bears will be eyeing a potential retest of recent near-1.0800 lows.
Ahead, US flash PMIs for March are out next at 1345 GMT followed by more Fed speak and given the hawkish shift seen by other policymakers who have spoken thus far, the recipe remains towards a stronger buck. Geopolitics, of course, remain a key theme to watch as well as the G7 and EU announcing tougher sanctions against Russia, and NATO announcing it will bolster its forces on its Eastern flank.
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