The EURUSD pair renewed the 2020 low pressure of escalating military conflict in Ukraine.
The decision of Russian President Vladimir Putin to sell natural gas to ‘unfriendly’ countries for rubles is forcing European officials to refuse supplies and look for an alternative, more expensive options, which leads to inflation rising to a record high of 7.4%.
Also, German, Economic Minister Robert said on Tuesday that the country can stop importing Russian oil, and Poland is ready to help it search for new suppliers, which has already indicated its position on refusing to renew existing contracts.
Authorities hope to find alternatives in the coming days, the official said.
Against the backdrop of high inflation, the European Central Bank (ECB) is forced to adjust the current parameters of monetary policy.
There are no official statements about the upcoming interest rate hike, however, according to Goldman Sachs Group, the regulations may adjust the rate by 25 basis points in July, and by 2023 the value will reach 1.25%.
If ECB officials confirm this information, we can expect the EUR/USD pair to strengthen, and until then, the instrument is waiting for a downtrend.
The US Dollar is rising ahead of the US Federal reserve’s interest rate decision on May 4th.
It is expected that it will rise by 0.5% to 1%, which will help to fight against inflation.
Technically the price is testing a really strong and well-respected demand zone, in which it wasn’t able to break below it for more than 20 years.
Price broke below the triangle on the weekly and monthly timeframes, however, the demand zone will be a major breakthrough if broken.
On the other hand, the relative strength index and the moving average convergence divergence, are moving in down trending directions, roaming in oversold territory.
Next Monday will be a game-changer for the value of EUR/USD, especially since a major meeting will be held in France in order to discuss the most recent gas cutback from Russia to the EU.
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Figure 1 : TradingView, EUR/USD 2014-2022
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