EUR/USD keeps testing the two-month channel support line at $1.1292 which may still be slipped through ahead of key policy decisions from the Federal Open Market Committee (FOMC) tomorrow.
Together with the late December and early January lows at $1.1274 to $1.1272 the channel support line has held since late December. A fall through this support zone would put the mid-December low at $1.1222 as well as the November trough at $1.1186 on the map.
The downtrend remains firmly entrenched while the currency pair stays below the 16 January high at $1.1369 and, more importantly, the late November and December highs at $1.1383 to $1.1387.
Moreover, EUR/GBP has formed a bottom and is likely to rise further still.
Now that the November low and last week’s high at £0.8379 to £0.8381 have been exceeded, EUR/GBP is deemed to have formed a bottom at its year-to-date low at £0.8305. It was made right between the £0.8313 to £0.8277 December 2016, April 2017, December 2019 and February 2020 lows which represent key long-term support.
On the other hand, The dollar edged higher on Tuesday to within striking distance of its two-week peak, as investors bought safe-haven currencies amid tensions between Russia and the West over Ukraine while awaiting the outcome of the Federal Reserve’s policy meeting.
The US military put about 8,500 troops on alert to be ready to deploy to Europe if needed, in the latest effort to reassure jittery NATO allies in the face of a Russian military build-up near Ukraine.
“Much greater exposure of European economies to the crisis does not make the euro a particularly attractive vehicle to ride out the current storm,” ING analysts said.
The euro was down 0.2% at 0848 GMT to $1.1300, trading just off its lowest since on 20 December touched on Monday.