EUR/USD Sellers Probing Downside Looking for Value

The Euro is trading lower against the U.S. Dollar for a second session on Tuesday as the war in Ukraine escalated. This follows the decision by the West over the weekend to ramp up sanctions against Russia over its Ukraine invasion, prompting investors to shun riskier currencies.

At 15:01 GMT, the EUR/USD is trading 1.1147, down 0.0072 or -0.64%. The Invesco CurrencyShares Euro Trust ETF (FXE) is at $103.43, down $0.63 or -0.60%.

In economic news, a sharp rise in new orders drove expansion of Germany’s manufacturing sector in February, although rising tension between Russia and Ukraine was starting to affect business sentiment, a survey showed Tuesday.

The data was collected between February 10 and February 21, before Moscow invaded Ukraine last Thursday, in the biggest attack on a European state since World War Two.

However, business expectations had already weakened for the first time in four months due to increased tensions between Russia and Ukraine, the data showed.

Daily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. A trade through 1.1107 will signal a resumption of the downtrend. A move through 1.1389 will change the main trend to up.

The nearest resistance is a minor pivot at 1.1248. This is followed by a second minor pivot at 1.1301.

Daily Swing Chart Technical Forecast

The chart pattern suggests the market is in the hands of strong sellers with plenty of room to the downside with the May 25, 2020 main bottom at 1.0871 the next major target.

Today’s price action suggests sellers are targeting last week’s low at 1.1107. They hope to hit enough sell stops under this level to trigger an acceleration to the downside. Therefore, look for heightened volatility as the EUR/USD approaches this level.

The EUR/USD is likely to remain under pressure today as long as it remains below the pivot area at 1.1248 – 1.1301. Any break in the “lower-top, lower-bottom” chart pattern will also be a sign that the selling pressure is weakening.

Our work indicates that due to the number of unknowns at this time, traders will continue to probe the downside until they find value, which could be 1.0871.