The Euro has been on a bit of a decline, marking its third session in a row with a drop. Currently, the Euro is hovering around 1.0834, according to insights from Frances Cheung and Christopher Wong at OCBC.
While there are factors that could potentially boost the Euro, such as spending initiatives in Germany and Europe, along with optimism around a possible peace deal in Ukraine, there are still reasons to tread carefully. The Euro has experienced a rapid climb and ahead of potential reciprocal tariff threats set for April 2nd, there’s a warning of a possible short-term dip. Moreover, the situation with the Turkish Lira could have a ripple effect on the Euro, especially since European banks have substantial exposure—upwards of 100 billion Euros—to Turkish borrowers.
When it comes to tariffs, there’s a level of uncertainty hanging over the timing. Whether the 25% tariff on European automobiles and other products or the hefty 200% tariff on European alcohol will kick in anytime soon is still unknown. If these tariffs are confirmed, we might see the Euro dip further. Nonetheless, this dip might be a strategic opportunity to buy, chiefly due to emerging positive signals: the anticipation of a peace deal in Ukraine, likely increases in defense spending, and signs that the European Central Bank might temper its easing measures.
Looking at the daily chart, the bullish momentum seems to be tapering off, with the Relative Strength Index also dropping. While there’s a general sense of downside risk in the near term, there are also bullish signals to consider: the 21-day moving average has moved above the 200-day, and the 50-day is now surpassing the 100-day moving average. This suggests a strategy of buying on dips might be wise. Key support is identified at the 1.08 mark, along with the 1.0700/20 range, aligning with the moving averages and the 50% Fibonacci retracement from the October high to the January low. On the upside, resistance can be found around the 1.0950/70 range, correlating with the 76.4% Fibonacci level and recent highs, as well as at the 1.1020 level.
