The Euro steadies above 1.10 level in European session on Thursday, following 1.6% rally previous day (the biggest one-day rally since Jan 9, 2019).
The single currency was lifted by improved sentiment on hopes of de-escalation of the conflict in Ukraine that prompted investors into riskier assets.
The two-day rebound from 22-month low (1.0806) and Wednesday’s close above pivotal barriers at 1.1000/40, improved near-term outlook and put larger bears temporarily on hold.
Technical studies on daily chart show rising momentum (although the indicator is still deeply in the negative territory) and fresh bulls cracking next pivot at 1.1059 (10DMA), with clear break here to add to positive signals and open way towards targets at 1.1121 (Jan 28 former low) and 1.1150 (50% retracement of 1.1494/1.0806 fall, reinforced by daily Kijun-sen).
Repeated daily close above 1.1040 (former strong Fibo support) is needed to reinforce near-term bullish stance and add to reversal signals.
However, fundamental are expected to keep the key role in defining the pair’s near-term direction, with all eyes on talks between top Russian and Ukrainian officials, the ECB policy meeting and the EU summit.
The European Union leaders are expected to provide more details of the further steps of bloc’s policy response to Russia’s military action in Ukraine, while investors expect the European Central Bank to announce the start of gradual phasing out its pandemic bond-buying program and to start raising interest rates before the end of the year.
On the other side, the EU is facing strong pressure from the war and fears that impact of the sanctions imposed on Russia may derail the economy and slow stable post-pandemic growth, as the EU is the most vulnerable due to its strong economic ties with Russia and heavy dependence on Russian energy and raw materials.
This may cause the more cautious approach by the policymakers and possibly result in a more dovish than expected central bank’s stance on today’s policy meeting.
Res: 1.1095; 1.1121; 1.1150; 1.1231.
Sup: 1.1040; 1.1000; 1.0962; 1.0900.
