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EUR/USD Price Setup:
- EUR/USD bounces off support at 1.1300, German Ifo business climate lifts the Euro
- Developments in the Russia-Ukraine crisis continue to drive sentiment
- Price action edges higher following the reduction in expectations of a 50 basis point rate hike at the March Fed meeting.
EUR/USD prices have remained resilient despite elevated geopolitical risks. As Russia-Ukraine tensions gain traction, the deployment of “peacekeeping forces” to two breakaway areas in Ukraine (the Donetsk People’s Republic and Luhansk People’s Republic aka Donbas region) raised speculation of a probable invasion which continues to drive risk-appetite.
In response to Putin’s decision, the UK, US, Japan and the European Union announced their intensions to issue sanctions against Russia which include placing the certification of the Nord Stream 2 Baltic Sea gas pipeline contract on hold.
With supply constraints exacerbating inflationary pressures, the project that was completed in September last year was designed to double the flow of Russian gas to Germany in an effort to reduce energy prices for citizens of the EU.
With the highly anticipated Federal Reserve interest rate decision on the horizon (16 March), a reduction in the probability of a 50 basis point rate hike reduced demand for the safe-haven Dollar, pushing EUR/USD higher.
With an array of high impact economic events still scheduled to take place throughout the course of the week, inflation data and further developments in the crisis may provide and additional catalyst for price action over the short-term.
DailyFX Economic Calendar
EUR/USD Technical Analysis
After rising above trendline resistance turned support earlier this month, EUR/USD bulls managed to drive prices higher before running into a wall of resistance at around 1.1495, the 50% Fibonacci level of the 2020 – 2021 move.
Failure to rise above this level allowed sellers to force EUR/USD back towards the key psychological level of 1.1300 which continues to provide support for the imminent move.
EUR/USD Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
As EUR/USD continues to trade within a zone of confluency, Fibonacci levels from historical moves of prominence continue to provide support and resistance for the major currency pair.
For now, support levels remain at the respective levels of 1.1300, 1.120 and 1.105 while resistance levels remain at 1.140, 1.495 and 1.160
Chart prepared by Tammy Da Costa using TradingView
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
