EUR/USD continues decline towards 2020 lows after dipping back under 1.0700 By Frank_Macro EURUSD ECB Fed
After dropping under 1.0700 during APac trade, EUR/USD continues to press lower towards its 2020 lows in the 1.0630s.
The pair continues to suffer as a result of expectations for Fed/ECB policy divergence, as well as Russo-Ukraine war risks.has continued to trade with a negative bias throughout European trading hours and continues to make bearish headway towards its 2020 lows in the 1.0630s. At current levels around 1.0670, the pair is trading with on the day losses of about 0.4%, with the euro failing to take advantage of the hawkish comments from ECB policymaker Martin Kazaks.
Kazaks reiterated his preference for the bank to begin rate hikes in July and called expectations for two or three hikes this year “quite reasonable”. As analysts have noted, the recent hawkish shift in policy guidance from the towards rate hikes in Q3 has failed to lift the euro against the US dollar because the recent hawkish shift from the Fed has been larger.in 50 bps intervals at its next few meetings and is likely to take interest rates back to neutral by the end of the year, with the risk of much higher rates to follow in 2023 dependant on inflation outcomes.
If the pair does break below its 2020 lows in the coming days, as is very possible, the door would be open to a drop to the next key area of support in the form of the 2017 lows at 1.0340, which would mark a further more than 3.0% decline from current levels.
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