- The EUR/USD fluctuated during Thursday’s session but remained up 0.14% in the week.
- Risk-aversion in the financial markets remains unless tensions between Ukraine and Russia ease.
- EUR/USD is neutral biased, but downward risks remain as long as the pair stays under 1.1400.
On Thursday, amid mounting tensions in the Russia – Ukraine crisis, the shared currency falls 0.04% during the North American session. At the time of writing, the EUR/USD is trading at 1.1367. The financial market mood remains negative. In the Asian session, the EUR/USD witnessed a drop of 58-pips on “reports” that Ukraine forces fired grenades, which officials later denied. Following that headline, the pair stabilized and aimed higher until stalling around the 200-hour simple moving average (SMA) at 1.1363.
Headlines controlled by Russia/Ukraine conflict
In an update of the eastern Europe conflict, Russia stated that Ukraine committed war crimes in Donbas, as stated by a letter to the UN. In the meantime, the US raises the possibility of Russia’s “false-flag” operation as a “pre-text” to invade Ukraine. In the last hour, the White House reiterated its commitment to diplomacy, per remarks of US Secretary of State Blinken at the UN.
ECB and Fed speaking crossing the wires
Earlier in the North American session, ECB’s Chief Economist Philip Lane crossed the wires. He said that “the key message of the February meeting was that risks to inflation are tilted to the upside in the near-term,” according to Reuters. Lane added that “if there is a threat that inflation will settle above two percent in the medium term, while also making sure not to over-react to the extent that there is a risk that high near-term inflation might induce an excessive monetary tightening that pushes inflation persistently below the two percent target over the medium term.”
In the meantime, St. Louis Fed President James Bullard reiterated that he would like 100 bps of rate hikes by July 1 while adding that he is “losing faith” that inflation may abate. Bullard emphasized that an aggressive rate hike would signal that the US central bank is “serious” regarding inflation control. Furthermore, he added that the Fed “may have to go beyond the neutral rate to control prices.”
The US macroeconomic featured Initial Jobless Claims, increasing 248K higher than the 219K for the week ending February 19. At the same time, Building Permits rose to 1.899M better than the 1.76M foreseen, while the Philadelphia Fed Manufacturing Index decreased from 16 to 20, estimated.
EUR/USD Price Forecast: Technical outlook
The EUR/USD is neutral biased and faces strong resistance with the 100-day moving average (DMA) at 1.1400, alongside Pitchfork’s top-trendline around the 1.1400 figure. A clear break would expose February 11 daily high at 1.1430, followed by February 10 cycle high at 1.1494.
On the flip side, the EUR/USD first support would be the 50-DMA at 1.1329. Breach of the latter would expose 1.1300, followed by February 14 daily low at 1.1279. Once cleared, the next EUR/USD floor would be January 28 pivot low at 1.1120.
