EUR/USD has dropped below 1.1000 for the first time in a week.Rising US Treasury bond yields help the dollar hold its ground.
EUR/USD has been struggling to stage a convincing recovery after having closed the first day of the week below 1.1000. The pair is likely to stay on the back foot in the near term amid escalating fears over a recession in the euro area and the broad-based dollar strength.
Markets grow increasingly concerned that the eurozone economy could suffer a recession in case the European Union (EU) decides to sanction Russian energy imports.
The EU is reportedly looking to include steel and jet fuel in the next sanction package, which is expected to be introduced this week. The bloc is divided over whether to ban Russian oil and gas. The European Central Bank (ECB) will face a tough balancing act in case energy prices continue to rise and economic growth loses momentum.
EUR/USD Technical Analysis.
EUR/USD registered a daily close below the key 1.1000 level, where the Fibonacci 38.2% retracement of the latest downtrend is located. During Monday’s action, the 20-period SMA on the four-hour chart crossed below the 200-period and the 50-period SMAs. Additionally, the Relative Strength Index (RSI) indicator stays below 40, confirming the bearish tilt.
The pair needs to rise above 1.1000 and use that level as support in order to attract bulls and stage a recovery. 1.1020 (100-period SMA) and 1.1040 (Fibonacci 50% retracement, 50-period SMA) align as the next technical hurdles.
On the downside, supports are located at 1.0960 (static level), 1.0940 (Fibonacci 23.6% retracement) and 1.0900 (psychological level).
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