The euro is coming off a nasty week and has continued its downswing on Monday. EUR/USD fell 3% last week and the pair has dropped 0.9% on Monday, to 1.0830. Earlier, the euro dropped to 1.0821, its lowest level since May 2020.
US dollar gains ground as risk appetite sinks
The US dollar continues to power forward as investors sought risk protection from the safe-haven greenback. At time of writing, the dollar index has risen to 99.23, up 0.59% as it moves steadily toward the symbolic 100 level.
The war in Ukraine rages on, with Russian President Putin saying that he will not stop the fighting until Ukraine surrenders. The West has ratcheted up its sanctions package, and there is now talk in Washington of trying to kick Russia out of the World Trade Organization. Just to add to the toxic mix, oil prices surged to USD 130 on fears that the US and Europe may block Russian oil transfers.
It’s a messy situation all around, and the euro has become a punching bag for jittery investors, as the eurozone is not all that far from the fighting and much of its oil needs are covered by Russian supplies. Any good news, such as progress towards a cease fire, could help reverse the euro’s nasty skid.
Meanwhile, the US economy continues to hum, with an excellent nonfarm payroll release. The economy created 678 thousand jobs in February, breezing past the consensus of 400 thousand and above the January reading of 481 thousand. Unemployment fell to 3.8%, down from 4.0.%.
With workers in short supply, pressure on wages will continue, and the Fed is likely to respond with a cycle of rate hikes, starting in March. The US releases CPI on Thursday, which is projected to hit 8%. A release within expectations will raise pressure on the Fed to align their timeline more closely with market expectations of six rate hikes this year.
EUR/USD Technical
- There is resistance at 1.1256 and 1.1406
- 1.0796 is under strong pressure in support and could be tested during the day. Below, we find support at 1.0661