Euro slides to 5-year low

The euro continues to lose ground and is down for a fifth successive day. EUR/USD has fallen close to 1% today, as it trades at 1.0542.

 

Russia’s comments weigh on markets

The euro blues show no signs of easing, as the currency is getting pummeled by the US dollar. EUR/USD is down 2.34% this week and has plunged a massive 4.72% in April. Comments out of Moscow have dampened risk appetite and weighed on the wobbly euro. Russia is clearly perturbed by the shipments of weapons from the US and Western Europe to Ukraine, and Russian officials have responded with threatening rhetoric, warning that these weapon shipments are legitimate targets. Russian foreign minister Lavrov has added that the threat of nuclear war is “real”.

If this wasn’t enough to give investors the jitters, Russia announced that Poland and Bulgaria would have their natural gas supplies cut off if they did not pay in roubles. Moscow is raising the ante by the weaponisation of its energy supplies, a move that could have dire consequences for European countries dependent on Russian energy. In this bleak environment, it’s no surprise that the euro is under strong pressure, and could be headed for 1.0300 and even parity if the standoff between the West and Russia continues.

Another factor weighing on the euro is the Federal Reserve, which is tightening policy and is virtually certain to deliver a half-point rate increase next week. With Fed Chair Powell and other FOMC members saying that more half-point hikes could be on the way, an aggressive Fed is widening the US/Europe rate differential and making the euro less attractive to investors.

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EUR/USD Technical

  • EUR/USD continues to break through support levels. 1.0553 is under pressure, followed by support at 1.0411
  • There is resistance at 1.0657 and 1.0728

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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