Euro Dollar Outlook: EUR/USD Slides as USD Drives Price Action
Euro, US Dollar Talking Points
- EUR/USD slides through prior support
- EUR remains under pressure amid uncertainty surrounding Russia and Ukraine
- USD safe-haven appeal drives price action for now
With global leaders now uniting in support of Ukraine, additional sanctions against Russia by both the EU and the US has done little to deter Putin who has persisted with his efforts to invade Ukraine
As inflation remains a key concern for policy makers, the ECB (European Central Bank) and Federal Reserve now face additional hurdles, casting a shadow of doubt over the pace at which interest rates will rise.
EUR/USD Technical Analysis
EUR/USD has continued to falter as geopolitical tensions support the safe-haven Dollar.
Although the downward trajectory (from the June 2021 high) is currently intact, price action remains encapsulated between key Fibonacci levels of both the historical moves of prominence. After falling below psychological support at 1.200, bears managed to maintain dominance over the primary trend, allowing them to drive prices towards the 76.4% Fibonacci level of the 2020 – 2021 move, currently providing support at around 1.103.
As price action remains below the 50-day MA (moving average), the key psychological level of 1.100 remains as a key psychological level which will likely continue to hold bears at bay. Meanwhile, the CCI (commodity channel index) remains in negative territory, a possible indication that the pair may be oversold.
EUR/USD Daily Chart
Chart prepared by Tammy Da Costa using TradingView
EUR/USD Key Levels
- S1: 1.103
- S2: 1.100
- S3: 1.050
- R1: 1.120
- R2: 1.128
- R3: 1.140
EUR/USD: Retail trader data shows 66.36% of traders are net-long with the ratio of traders long to short at 1.97 to 1. The number of traders net-long is 9.42% higher than yesterday and 29.62% higher from last week, while the number of traders net-short is 5.23% lower than yesterday and 35.77% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger EUR/USD-bearish contrarian trading bias.
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.