The EUR/USD currency pair is currently trading around the 1.0400 mark as the week begins, with market participants keenly awaiting the release of preliminary inflation data from the Eurozone for February. Geopolitical developments may play a significant role in shaping the US Dollar’s value and influence the pair’s movements throughout the week.
After finishing the previous week on a downturn, the EUR/USD pair is managing slight daily gains. However, the technical indicators do not yet suggest that any significant recovery momentum is building for the EURO in the near term. In the latter part of last week, the pair experienced three consecutive days of losses, dropping to a low of 1.0360, the weakest level in over two weeks. Increased geopolitical tensions arose when the US President scrapped a minerals agreement with Ukraine following a contentious exchange with Ukraine’s leader, leading to a more cautious trading environment for investors.
Over the weekend, urgent discussions among European leaders and the British Prime Minister took place, reiterating their backing for Ukraine amid the ongoing conflict. The French President emerged in talks suggesting a month-long truce aimed at halting air and sea hostilities along with attacks on critical energy infrastructure.
Given the current uncertainty regarding EU-US relations, speculative bets on a consistent EURO recovery may be limited. In the European session, Eurostat is set to publish the Harmonized Index of Consumer Prices (HICP) for February. Later in the day, the ISM Manufacturing PMI report will be released, but traders might regard these data releases as secondary to the prevailing geopolitical situation. Should safe-haven assets gain prominence in the market, EUR/USD could face renewed downward pressure.
From a technical standpoint, the Relative Strength Index (RSI) on the 4-hour chart is positioned below 50, with the EUR/USD trading under the 20-day Simple Moving Average (SMA) of 1.0420. If the pair dips further, initial support appears at 1.0350, followed by levels at 1.0300 – 1.0290 and 1.0250. Conversely, a daily close above 1.0420 could lead to resistance at 1.0440 and further up to the 1.0500 – 1.0510 range.
