EUR/USD Sellers Targeting 1.0945 for Start of Down Trend

The Euro is trading lower on Monday, weighed down by a stronger U.S. Dollar and worries about economic damage from war in Ukraine. The dollar firmed as Treasury yields rose with expectations of rapid-fire U.S. interest rate hikes.

Meanwhile talk of Europe banning Russian gas kept a lid on the Euro. Germany said on Sunday that the West would agree to impose more sanctions on Russia in the coming days after Ukraine accused Russian forces of war crimes.

At 10:44 GMT, the EUR/USD is trading 1.1002, down 0.0049 or -0.44%. On Friday, the Invesco CurrencyShares Euro Trust ETF (FXE) settled at $102.43, down $0.16 or -0.15%.

According to Reuters, there seems to be momentum for at least discussing an embargo on energy imports, which would likely come with price pain since Russia supplies some 40% of Europe’s gas needs.

German Defence Minister Christine Lambrecht said the European Union should talk about ending Russian gas imports and Italy’s Foreign Minister Luigi Di Maio did not exclude a debate on the issue occurring in the next few hours.

The daily chart pattern suggests that increasing negative news and soaring energy prices could quickly drive the EUR/USD back to the 1.0800 area.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through 1.0945 will change the main trend to down. A move through 1.1185 will signal a resumption of the uptrend.

The EUR/USD is currently testing a pair of 50% levels at 1.1019 and 1.0972. Traders have been trying to establish support inside this area for weeks.

On the upside, the nearest resistance is a 50% level at 1.1098, followed by another 50% level at 1.1151.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD into the close on Monday is likely to be determined by trader reaction to 1.1019.

Bearish Scenario

A sustained move under 1.1019 will indicate the presence of sellers. If this creates enough downside momentum then look for the selling to extend into the 50% level at 1.0972. This is the last support before the 1.0945 main bottom

Taking out 1.0945 will change the main trend to down. This could trigger the start of an acceleration to the downside.

Bullish Scenario

A sustained move over 1.1019 will signal the return of buyers. If this generates enough upside momentum then look for a near-term surge into 1.1098.