The euro has traded in a 1.0806-1.1137 range since March 3, falling just 0.6% last week, despite a slew of negative factors.
In foreign exchange markets when fundamental factors cease to drive moves, the old adage 'what won't go down, could easily go up" may apply.
Interest rate differentials have expanded, which traditionally supports the U.S. dollar. Ten-year bund yields climbed 21 basis points last week to 0.570%, while 10-year Treasuries rose 32 basis points to 2.473%.
Central bank expectations suggest rate differentials will continue to expand. European Central Bank President Christine Lagarde said "Incoming data don't point to a material risk of stagflation", maintaining her view that inflation will eventually fall, in weekend comments nL5N2VT0OH.
Meanwhile Federal Reserve President John Williams said on Friday, rates may need to be raised more aggressively to tackle high inflation nL2N2VS1BW.
The Ukraine conflict continues to intensify, with only modest expectations that progress will be made at truce negotiations on March 28-30 nL2N2VU00S. The euro has been a bellwether for sentiment on Ukraine, but remains resilient despite the belief that Europe's economy will suffer more than that of the U.S. in a prolonged conflict.
Technically 5, 10 and 21-day moving averages coil, while 21-day Bollinger bands contract and momentum studies show neutral signals.
The conflicting signs suggest further consolidation.
The 1.0806 2022 low and 1.1150, 50% of the 2022 fall, are the key levels.
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