The Euro is trading at a multi-month low against the U.S. Dollar on Thursday after the Federal Reserve said it is likely to raise U.S. interest rates in March as expected and later launch a significant reduction in its asset holdings.
The combined moves, along with reaffirmed plans to end its bond purchases in March, will complete a pivot away from the loose U.S. monetary policy that has defined the pandemic era and toward a more urgent fight against inflation.
At 14:13 GMT, the EUR/USD is trading 1.1152, down 0.0091 or -0.81%. On Wednesday, Invesco CurrencyShares Euro Trust ETF (FXE) settled at $104.40, down $0.62 or -0.59%.
The Euro is also being pressured by tensions between Russia and the West over Ukraine, which is drawing investors into the safe-haven U.S. Dollar.
Tensions remained high despite diplomatic efforts to bring an end to the brewing conflict. Earlier in the week, NATO said it was putting forces on standby and reinforcing Eastern Europe with more ships and fighter jets in response to Russia’s troop build-up near its border with Ukraine. Meanwhile, 8,500 U.S. troops were put on alert to deploy to Europe in the event of an escalation.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. The downtrend was reaffirmed earlier today when sellers took out the November 24, 2021 main bottom at 1.1186 and the June 19, 2020 main bottom at 1.1168.
Short-Term Outlook
The break through 1.1168 has put the May 25, 2020 main bottom at 1.0871 on the radar. We don’t expect to see this level reached over the short-run, but traders should be aware of the fact that there is no major support until this level.
The speed at which the EUR/USD reaches this level, if at all, will be determined by whether the Ukraine/Russia conflict escalates into a full-blown war, how aggressive the Fed attacks inflation and whether the European Central Bank decides to reign in economic support and begin raising rates.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire