For four trading sessions in a row, the price of the EUR/USD currency pair moved amid a bearish momentum that reached the support level at 1.0900. This is stable at the time of writing the analysis. Euro gains will remain subject to sale as long as the Russian war continues. This performance is important today, as the US Federal Reserve will announce the contents of the minutes of its last meeting. In general, the US central bank is still determined to pass more US interest rate hikes throughout the year to confront the fiercest inflation wave the country has witnessed in 40 years, the pandemic, and then the Russian war were the most prominent factors in its occurrence.
On the other hand, the European Central Bank remains neutral towards tightening its policy, which is in the interest of the strength of the US dollar.
US stocks and bonds fell as investors weighed hawkish comments from the Federal Reserve and a new round of possible sanctions on Russia, escalating global tensions over Moscow’s invasion of Ukraine. As a result, the S&P 500 Index fell, led by losses in technology stocks, while Treasury yields also declined amid growing concern about inflation and the policy response. Fed Governor Lyle Brainard said the US central bank will continue to systematically tighten policy and shrink its balance sheet at a rapid pace as soon as May. The US 10-year Treasury yield surged for a third day to its highest level in three years, with the spotlight on inverted yield curves that could signal an economic downturn, should the Fed tighten hard to quell rate increases.
In general, market movements continue to be shaped by the fallout from monetary tightening and the war in Ukraine as raw material costs drive up inflation. The United States, the European Union and the Group of Seven are expected to announce additional sanctions on Russia, including a ban on all new investments in the country. In addition, the European Union plans to propose a mandatory phase-out of coal imports from Russia in direct response to reports that Moscow’s forces have apparently committed war crimes in Ukraine.
According to the technical analysis of the pair: The recent performance may move the EUR/USD towards the psychological support 1.0800 in the event of breaking the 1.0880 support. The psychological support was the most prominent expectations of analysts for the performance of the EUR/USD since the start of the Russian war. Traders will be looking for today’s minutes from the Federal Reserve’s latest meeting to guide expectations on how quickly the bank plans to raise US interest rates and reduce its bond holdings. Technical indicators still point to the continuation of the bearish trend, and traders may ignore the fact that some of them have reached oversold levels, as concerns about the consequences of the Russian war are still negatively affecting the European currencies.
On the upside and according to the performance on the daily chart, the breach of the 1.1220 resistance will be important for the bulls to control. As I mentioned before and I confirm now, the gains of the EUR/USD pair will remain subject to sale as long as the Russian/Ukrainian war lasts