EUR/USD holds on to gains just above a Fibonacci support level at 1.1070.
The EUR/USD pair traded as high as 1.1136, adding roughly 150 pips on the back of encouraging headlines related to the Eastern Europe crisis. Russian and Ukrainian representatives met in Turkey to discuss ceasefire conditions, announcing afterwards progress had been made. The most relevant news was that Moscow agreed to “drastically reduce” military activity around Kyiv and Chernihiv to create conditions for dialogue. However, despite persisting optimism, the EUR/USD pair retreated during US trading hours towards the 1.1080 area.
Meanwhile, financial markets are pricing in a 60 bps hike in Europe, while US Philadelphia Federal Reserve President Patrick Harker noted that rate increases should be methodical. He said he would not rule out a 50 bps hike in May but would not commit either. Finally, he added that the balance sheet reduction could be equivalent to two quarter-point rate increase.
EUR/USD short-term technical outlook
The EUR/USD pair retreated towards the 1.1080 region, where it currently trades. So far, it remains above the 38.2% retracement of its January/March decline at 1.1070, the immediate support level. The daily chart shows that the EUR/USD soared past a now flat 20 SMA, although it remains well below the longer ones. Technical indicators diverge from each other, standing within neutral levels and failing to provide clear directional clues.
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