Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.07200.
- Add a stop-loss at 1.900.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.0850 and set a take-profit at 1.0910.
- Add a stop-loss at 1.0750.
The EUR/USD pair downward momentum faded on Friday and Monday morning as the Easter weekend continued. The pair is trading at 1.0815, which is close to its lowest level since March 2020. It has dropped by more than 3% from its highest level this month.
ECB Being Left ehind
The EUR/USD pair has been in a downward trend as investors worry about whether the ECB is being left behind. In its meeting last week, the bank decided to leave interest rates unchanged. It also maintained its tightening process that involves reducing the size of its asset purchases.
The ECB decision was different from those made by other major central banks other than the Reserve Bank of Australia and the Bank of Japan. In the United States, the Fed has already moved and hinted that it will accelerate this tightening. The same is true with other banks like Norges, Riksbank, Bank of Canada, and the Reserve Bank of New Zealand.
The ECB has been more cautious because of the ongoing crisis in Ukraine and the fact that the Eurozone will be more affected. For one, the region depends on Russia for oil and natural gas. Last week, the bloc unveiled plans to stop importing oil from Russia. There is also a likelihood that the bloc will stop importing natural gas.
There will be no economic data from the EU and the US on Monday because the markets are closed for the Easter holiday. Therefore, there is a likelihood that the pair will move sideways today.
Later this week, the pair will react to the important inflation data from the European Union. Economists expect the data to show that the bloc’s inflation jumped to 7.5% in March. This will be a record figure and the situation will continue worsening as the war escalates.
EUR/USD Forecast
The four-hour chart shows that the pair has been in a bearish trend. Last week, it managed to move below the support at 1.0806, which was the lowest level in March. The pair remains slightly below the 25-day and 50-day moving average. A closer look shows that the pair has formed what looks like an inverted cup and handle pattern. In price action analysis, this pattern is usually a bearish sign.
Therefore, the pair will likely keep falling as bears target the next key support level at 1.0720. A move above the resistance level at 1.090 will invalidate this view.
