Home Analysis No Relief For EUR/USD, Here’s Why EUR/USD Could Extend Losses

No Relief For EUR/USD, Here’s Why EUR/USD Could Extend Losses

58
0
No Relief For EURUSD, Here’s Why EURUSD Could Extend Losses - forexspacex.com

EUR/USD reclaimed the 1.0600 level during the course of the trading session on Wednesday after the US Federal Reserve decided to raise the interest rate by 50 bps, the largest increase in 22 years.

Market participants interpreted the statements of Fed Chair Jerome Powell as moderately hawkish as opposed to the expectations of aggressively hawkish. The quantitative tightening program regarding the balance sheet reduction announced by the Federal Reserve also fell short of the expectations of investors.

The US dollar declined sharply and the dollar index which is the benchmark for the value of the U.S. dollar against major currencies, fell almost 1% from a 20-year high. The U.S. dollar index failed to sustain the upside momentum and fell towards the support level near the 102.80 mark. Consequently, the Euro edged higher and climbed 0.95% against the US dollar.

However, EUR/USD could nosedive as the Pandemic Emergency Purchase Program from European Central Bank is contributing to the surge in inflation. Fundamentally, the Russia Ukraine conflict has already challenged the growth of European economies. According to the U.S. Energy Information Administration, Russia exports almost 50% of its crude oil and 75% of its natural gas to European economies.

A collective sanction against Russia by European economies in response to starting a war with Ukraine has soured the corporate relationship.  The expensive energy prices and the threat from Russia regarding the Gas supplies are weighing down on Euro. The relative strength index indicator is still in oversold territory as bears remain in control. As a result of this, the EUR/USD is correcting lower and trying to get below the support at the 1.0600 mark Today.

Previous articleGBP/USD is directionless ahead of Bank of England policy meeting
Next articleUSD/CAD holds strongly above 1.2900 level

LEAVE A REPLY

Please enter your comment!
Please enter your name here