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EURUSD Stops Losses But Lacks Upside Traction

EURUSD rose marginally in the early hours of the European session on Monday, as the dollar’s strength dissipated. The EURUSD currency pair was up by 0.07% to trade at 1.0814 at the time of writing. The absence of high-impact data from the Eurozone and only two from the United States sets the stage for a potential muted trading session on Monday.

EURUSD has been on a descending trajectory since March 12, amid strong US dollar fundamentals. Nonetheless, the underlying euro fundamentals have provided support that limited the downside. Like the Federal Reserve, the ECB retained its high interest rates in its March governing council meeting. The 4.5% interest rate is widely expected to remain in place at least until June.

Meanwhile, the US dollar enjoyed a stellar run against DXY currencies in the aftermath of the Fed interest rate decision. The US economy printed out a series of better-than-expected data last week, solidifying the strength provided by the interest rate decision. This week, however, EURUSD investors will look for fresh impetus.

The euro has started the week on the front footing, but the dollar’s safe haven status will provide support for the greenback, amid the escalation of the Russia-Ukraine conflict. The war has taken a new turn following the two countries’ attacks on each other’s energy infrastructure. In addition, Russia made reference to Ukraine following Friday’s terrorist attack on Moscow’s Crocus City Hall.

Speeches by ECB President Christine Lagarde and FOMC member Raphael Bostic could inject new insights into the EURUSD market fundamentals on Monday. In addition, the US will release its February New Home Sales and New Building permits data, which are expected to impact decision making.

Technical analysis

EURUSD will need to overcome the resistance at the 1.0830 pivot level to build momentum for the upside. Otherwise, the sellers will be in control below the pivot mark, with the support at 1.0975 likely to be breached. A breach of 1.0795 will strengthen the downward momentum and could see a push to 1.0775. Conversely, a move above 1.0830 will favour control by the buyers, with the resistance at 1.0850 in sight. A break above that point will negate the downside view and potentially provide propulsion to test 1.0870.