EUR/USD continues to trade lower from last one month, initially due to the geopolitical tension between Russia and Ukraine and now due to the fear of recession in Europe after the conflict turned into a war.
As Russian military tightens the grip over Ukraine’s capital Kyiv, Euro is attracting heavy selling and extending the decline toward a fresh low. Euro fell by 0.5% on Monday and 0.9% on Tuesday against the US dollar. Today, it is testing the major support level at 1.1200 mark in the Asian trading session. Investors are concerned that a prolong war in Ukraine could damage the European economy, which has already suffered heavily due to COVID in the last two years.
As Russia exports crude oil, natural gas and coal to major European countries, the overall risk sentiment in the foreign Exchange market is high due to the strict sanctions on Russia which could have a devastating effect on the supply chain of European Energy sector.
According to financial analysts, EUR/USD may continue to trade downward amid the near-term fundamental bearish bias. The induced panic in the financial market will hit the Euro hard. EUR/USD is already trading near two-year low and may touch a fresh low if representatives from Russia and Ukraine does not reach at any conclusion today.
From a technical perspective, the main trend is downwards on the daily chart. The 14-Period Relative Strength Index Indicator is hovering near the 35 mark, indicating a potential consolidation or a minor correction. The price is trading well below the 9-day and 18-day Exponential Moving Average which suggests a bearish sentiment in the market.