The bears show their claws as tensions rise in Ukraine
- The Kremlin noted that all plans on Ukraine “will be fully implemented”.
- Stocks lost their initial momentum on the stock market as Wall Street was poised to open in the red.
- EUR / USD is technically bearish and could reach new yearly lows once below 1.0900.
EUR / USD started the week in forex on a softer tone, flirting with the 1.0900 figure before finally rebounding again to hit a daily high at 1.0989 in hopes of a diplomatic settlement to the Eastern European dispute. . However, the optimism was short-lived, as a Kremlin spokesperson noted that “all of Russia’s plans in Ukraine will be fully implemented and on schedule.” Geopolitical tensions remain in the eye of the storm, dragging financial markets lower in the absence of another catalyst. The euro has given up most of its intraday gains against the US dollar and is heading towards the US open around 1.0960.
By this week, the Federal Reserve will announce its monetary policy decision and is expected to trigger the first rate hike since 2018. The focus remains on whether the central bank will increase by 25 or 50 basis points. Meanwhile, the greenback is strengthening amid growing tensions between the US, EU and Russia.
For the moment, the European indices remain in the green, even if they trim a large part of the first gains. Wall Street futures are under pressure, indicating another negative day. Bond yields, on the other hand, rose, with the 10-year US Treasury now losing 2.07% after peaking at 2.0106%.
Short-term technical outlook
The EUR / USD pair maintains modest gains in forex today, but the daily chart shows that the risk remains to the downside. The SMA-20 moving average maintains a steep bearish slope well above the current level, converging with the 50% retracement of the last daily plunge. Immediate resistance is the 23.6% retracement around 1.0965. Technical indicators, meanwhile, stabilized at negative levels after correcting the extreme oversold conditions.
Risk is also biased to the downside in the short term and on the 4-hour chart, as the EUR / USD has encountered sellers around the SMA-20 moving average, while the longer moving averages hold their firmly bearish slopes. Technical indicators look set to resume their slides on negative levels, having curtailed their early gains. EUR / USD could reach new annual lows near 1.0800 if the intraday low breaks under pressure from sellers.
Levels of support : 1.0900 1.0855 1.0810
Levels of resistance : 1.0965 1.1010 1.1070
By Valeria Bednarik, FXStreet
Valeria Bednarik has extensive experience writing technical and fundamental analysis with a particular focus on currencies and commodities. Her short but precise passages by her cover the different aspects of the market, adopting a didactic approach appropriate to the level of competence of any reader. She graduated from the Universidad Católica del Salvador, Argentina, as a Chartered Accountant, specializing in taxation and cost management.
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