EUR/USD Sheds Initial Losses, Recovers from Low Points Close to 1.0850
Dropped Some to Gain Some
The Euro has persistently been under a lot of pressure, and it has pulled the EUR/USD currency pair down now to a new low of four weeks in the 1.0850 regions as the week drew to a close. The EUR/USD pair is now chasing the low point of 2022, close to 1.0800.
The pair, thus far, managed to shed some part of the initial loss to a new low of many weeks, even though it is experiencing a heavy downward pressure, having a background of political fears in Ukraine and the attempts at maintaining the purchase of the US dollar.
EURUSD price chart. Source TradingView
As expected, geopolitical fears have taken the front seat again as the European Union declared its latest set of sanctions against Russia. The new sanctions target Russia’s coal and, at the same time, set the stage for a possible sanction coming against the oil and gas coming from Russia.
Another factor equally weighing heavily on risk sentiments seems to be the unchecked upscaling of the US Treasury bond yield in the middle of growing views that the US Federal Reserve might increase the speed of its monetary policy and start with 50 basis points in its next meeting scheduled for May.
This view was reaffirmed by the published minute of the Federal Open Market Committee meeting, which was held from the 15th to 16th of March. Another issue that became glaring through the meeting minute is the generally agreed need for the Federal Reserve to reduce its balance sheet to a maximum of $95 billion per month in order to curtail inflation properly.
The Euro docket was empty as the week ended, but the inventories on wholesales would be released in the US.
Expectations from the Euro
EUR/USD sellers kept controlling the sentiments revolving around the pair, and it stretched the downward trajectory to new low levels in the mid-1.080 area during the earlier trading session on Friday. The negative performance the pair experienced during many sessions was a result of a stronger paced US dollar and fresh concerns over geopolitics.
As the case always is, the little strength shown by the Euro appears to be occasioned by the speculations that the European Central Bank might increase interest rates before 2022 comes to an end. Other factors aiding the Euro’s recovery would be the rise in bond yields in Germany, increased inflation, gradual recovery of the economy, as well as favorable results from major events in the Eurozone.