The EUR/USD pair rallied higher as peace talks between Russia and Ukraine sparked optimism. What now?

Euro overview:

  • EUR/USD is rising and rising to its best level since March 17
  • News that Russia has decided to significantly reduce hostilities in some cities in Ukraine to add momentum to ceasefire negotiations boosts appetite for riskier currencies while weighing on the US dollar
  • In this article we explore the key technical levels that the EUR/USD pair should watch in the near term

Most Read: Euro rises, gold falls, crude oil criticized on Russia and Ukraine recently

The euro rose strongly against the US dollar on Tuesday after news that Russia decided to cut it sharply Fighting Activity near Kyiv and Chernigov in an attempt to de-escalate the escalation armed conflict and give impetus to cease-fire negotiations. Against this background, EUR/USD rose 1.35% to 1.1135 in morning trading before settling around the psychological level of 1.1100 by midday.

It is unclear whether President Putin’s government is using the ongoing talks Resupply and regroup militarily for a better offensive Or whether he sincerely seeks a A shift in strategy to reach a breakthrough Amid the failure to capture several Ukrainian cities in the north. There will be more information in the coming days, but traders/investors certainly welcome the possibility of a negotiated agreement to end the fighting by reducing defensive positions and Bids for risky assets are higher.

The eurozone was one of the most negatively affected Because of the war, because of its geographic proximity to the conflict and its strong trade links with Russia. in this contextAnd the 2022 Regional economic growth has been significantly reduced, while inflation expectations have been adjusted sharply higherAnd the hit both Investor and consumer confidence.

while the Forecasts are still subject to extraordinary uncertaintyIt is noteworthy that a Reducing geopolitical risks will be a tailwind This may help stabilize economic activity and sentiment in Europe. In turn, a milder macroeconomic background may allow the ECB to move forward with its monetary policy normalization plans, narrowing the yield spreads with the Fed. At this point, there are a lot of unknown variables, so traders will have to closely monitor geopolitical developments in the coming weeks to better assess the path of the single currency.

Technical analysis of the EUR/USD pair

After several days of consolidation, the EUR/USD exploded higher on Tuesday, challenging a layer of resistance at 1.1125/1.1140. It is important to watch how the tug of war between buyers and sellers around current levels resolves in the coming sessions, but if we see a sustained breakout on the top side, bulls may dare to attack trend line resistance near 1.1350. On the other hand, if the buying momentum wanes and the price pivots to the downside, technical support comes in at 1.0950, while On more weaknessAnd the The 2022 drop comes into the spotlight.

EUR/USD Technical Chart

EUR/USD chart set up in TradingView

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— Written by Diego Coleman, Contributor

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