EUR/USD Pulls Back as Dollar Recovers

The EUR/USD pair keeps being under pressure in the vicinity of the daily low point. It remains close to the 1.0550 area after it broke the three-week-long uptrend. Traders are currently reassessing the initial recovery while they brace up for events ahead.

Geopolitical and Institutional Pressures

That said, rumors about Russian activities in Ukraine are still weighing on the pair. China and central bank policies are also effective in putting pressure on the quote. Early European trade on Monday reveals all there was to be seen about the EUR/USD trades.

Excitement dwindled in the market as the S&P Futures declared just a little profit. This development put the attention of traders on the US Dollar as they scamper for safety. 

EUR/USD price chart. Source TradingView

The reason for that could be connected with the market’s reassessment positioning. The market is reconsidering its cautious optimism over the last week. It is also considering the new fears sweeping around over activities in Beijing and Moscow.

The recent comments from a German official about G7 leaders should be taken into consideration. It is said that the G7 leaders are talking about moving against Russia’s gold. The Group of Seven leaders is said to also intensify their ban on Russian oil.

The development from the G7, as expected, weighs significantly on risk appetite. In the same vein, the White House has released a statement. 

The statement expresses confidence that NATO’s new approach will have a strong tone on China. It also said there are negotiations going on about where to fix Beijing. This is according to news shared by Reuters.

While all these go on, the S&P 500 Futures is still strong close to 3,920. It has gone up by 0.20% intraday as of the time of this report. 

The US ten-year bond yields rose by 3 basis points to about 3.15%. This followed the printing of its first loss in four weeks.

Another factor adding to the EUR/USD weakness might be the US and China’s poor economy. There is news that the economies have gone considerably weaker over the past few weeks. One should not also forget the economic condition of Australia.

In addition, there is a cautious sentiment as the market expects some reports. The Home Sales and Durable Goods Order for the month of May is almost published. The market also expects a speech from the EBC President, Christine Lagarde.

All these factors put extra pressure on the EUR/USD pair. Speculations have it that the Durable Good Order should come in at 0.1%. This is against the last figure of 0.5% for April.

The Home Sales are also expected to come in at -2.0% against the -3.9% figure of April.

Technical Perspective

The EUR/USD pair traders require validations from the 10-period DMA convergence. They also need the same from the week-old support line close to1.0520.

As an alternative, the 21-period DMA and 50-period DMA close to 1.0600 restricts the near-term rebound. It is ahead of a downward resistance from the 10th of February, close to 1.0635.