EUR/USD gained sharply despite the increase in safe-haven demand assets. It hit an intraday high of 1.05465 and currently trading around 1.054356.
Geopolitical Context
There are the constant Russia-Ukraine peace negotiations accompanied by simultaneous international efforts, including U.S.-Russia diplomacy (with no direct involvement of Ukraine) and the UK- and France-facilitated European initiative, together with President Zelenskyy, to develop an agreed peace plan with an assurance of Ukraine's participation and safety. Turkey even offered to host peace negotiations on its soil following its previous role as a mediator. These steps are attempting to establish a platform for the negotiations in response to concerns that the Russia-U.S. negotiations would prioritize Russia's interests.
ECB Policy Outlook
The ECB is likely to cut its key interest rates by a further 25 basis points. This will push the deposit facility rate to 2.50%, the main refinancing rate to 2.65%, and the marginal lending facility to 3.00%
Technical Analysis of EUR/USD
The pair is holding above the short and below the long-term moving average in the 4-hour chart. Near-term resistance is seen at 1.0575; a break above this may push the pair to targets of 1.0600/1.0660. Major bullish momentum is likely only if prices can break above 1.0660, where levels of 1.0700, 1.0760, and 1.0800 await. On the downside, support is seen at 1.0500 any violation below will drag the pair to 1.0465/1.0435/ 1.0360/1.0300/1.0220.
Market Indicators and Trading Strategy
Commodity Channel Index (CCI)- Bullish
Average Directional Movement Index (ADX) - Bullish. It is good to buy on dips around 1.0535 with a stop-loss at 1.0490 for a target price of 1.0660.
