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Apr 25 - 11:55 AM

EUR/USD - COMMENT-Global Growth, COVID, Techs Could Drive EUR/USD Towards 1.0300

By Christopher Romano  —  Apr 25 - 10:05 AM

EUR/USD fell to a 2-year low Monday when consolidation of the fall from the March 31 high ended with a break below the 1.0750/1.0950 range, and a run toward 1.0300 could be possible as bearish risks intensify.

An increase in COVID cases in China left investors worried the possibility of additional strict lockdown measures nL3N2WN02V, which could negatively impact already slowing economic growth nB9N2W4007.

Global growth worries have soured risk sentiment, driving a flight to safety that underpinned the dollar =USD, yen and government bonds US10YT=RRDE2YT=RR.

The euro zone's dependence on China for growth hurts the euro in this context.
Morgan Stanley lowered its euro zone GDP forecasts nL5N2WN1XL due to growth worries and impact from the Russia-Ukraine war.

The China and war concerns have investors paring back expectations for the ECB's terminal rate FEIZ3 by bidding up Euribor prices, further weighing down the euro.

Global uncertainty has underpinned safe-havens like the dollar.
USD/CNH struck a 1-1/2-year high while EUR/JPY fell to a 4-session low on aggressive yen buying.

EUR/USD technicals highlight downside risks.
Completion of consolidation suggests the next leg of the longer-term bear market is underway.
Daily and monthly RSIs are falling but are not oversold which implies downside momentum remains.

EUR/USD shorts may now be targeting 1.0250/1.0350 structural support.

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Refinitiv IFR Research/Market Commentary


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