EURUSD Technical Analysis – Dollar Driven

The EURUSD pair remains pressured around 1.0500 after the US dollar index suddenly recovered all of its losses last week, in the aftermath of the less hawkish than feared Fed meeting.

After disappointing German Industrial figures last week the eurozone economy is under the microscope. If the powerhouse economy of Europe is under pressure, Germany, it generally bodes ill for the test of the Eurozone.

As economic growth concerns start to grow the Russia-Ukraine crisis and ECB’s divergence with Fed keep sellers in control. The rumour mill is also growing with talk of an all-out war in Ukraine.

The key focus in markets this week will continue to be inflation and central bank tightening. The former is like a wildfire spreading uncontrollably while the latter is still being driven by the Fed looking to tighten aggressively towards 3% at least potentially.

Therefore, stocks are likely to remain under pressure, and in such an environment the greenback remains king. As history has often proved.

Something that is still worrying right now is that traders are not bearish towards the EURUSD at all. The pair is falling lower with a continued bullish sentiment skew.

The ActivTrader Market Sentiment tool shows that some 59 percent of traders are bullish towards the EURUSD. Until traders turn wholesale bearish, the drop is likely to continue.