EUR/USD Extends the Corrective Decline To 1.0970

Sellers remain in control of the sentiment in the risk complex and force EUR/USD to retreat further south of the 1.1000 support on turnaround Tuesday.

EUR/USD Weaker, As Risk Aversion Picks Up

EUR/USD keeps the pessimism unchanged in the first half of the week and returns to the sub-1.1000 region on Tuesday because of the steady resumption of risk aversion in the global markets.

The move lower in the pair came although hawkish comments from ECB Board members Kazimir and Kazaks, who suggested that the ECB might go higher for longer thanks to slower rate hikes and the bank’s hiking cycle might not be finished in July, respectively.

There are no scheduled data releases in the Euro area on Tuesday. At the same time, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism Index are due across the pond, along with speeches by FOMC’s P. Jefferson and J. Williams.

What to Look For Around EUR

EUR/USD faces renewed downside pressure in response to the resurgence of risk aversion and the consequent investors’ move towards the greenback.

The movement of the euro’s value is expected to mirror the behaviour of the US Dollar closely. It will likely be impacted by any differences in approach between the Fed and the ECB regarding their plans for adjusting interest rates.

Moving forward, hawkish ECB-speak continues to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Critical Events in the Euro Area This Week: Germany Final Inflation Rate (Wednesday).

Eminent Issues on The Back Boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine War on the region’s growth prospects and inflation outlook. Risks of inflation becoming entrenched.

EUR/USD Levels to Watch

So far, the pair is losing 0.23% at 1.0977 and faces the next contention level at 1.0941 (monthly low May 2), followed by 1.0909 (weekly low April 17) and finally 1.0831 (monthly low April 10). On the flip side, the surpass of 1.1095 (2023 high April 26) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022).

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