Should we buy the Euro?
You can sell Euro to buy US dollars and stay on the safer side, straightforward calculation. Even before the war started, Euro was weaker, primarily because of the diversion between the central banks' policies. You have no reason to buy Italian, Spanish, or even French and German bonds when you can have a US bond with more than 2.5% fixed and free risk income.
Later, with the Russia and Ukraine conflict, the Eurozone economy suffered the most blows as its energy supply depended on Russia. Pressures on European countries to cut the business relation with Russia pushed them to step aside and talk slowly about sanctions on Russian Oil and Gas; even though the European committee could not agree on any specific sanction plan and was almost divided in two, still market sentiment leading by fear.
In the currency crisis, Russia passed a new law that wants 'unfriendly' countries to pay for Russian gas in the Ruble. As much as this policy boosted the Ruble, it was detrimental to the Euro. Russia already has suspended gas exports to some EU countries, which means a higher price for energy and even more pressure on the Eurozone economy.
On the other hand, pricing on faster rate hikes in the US is increasing, and now we have more than a 70% possibility for a 50bp rate hike in the May meeting by FED. All signals about supporting the US dollar, at least until the FED meeting, which means we can still count on US dollar buyers.
While we are waiting for Wednesday's ECB President Christine Laggard's speech, EUR/USD breaches the critical support, with deeper goals to see. EUR/USD has finally cracked the 2020 lows of 1.0515, the lowest level since April 2017. Technical indicators remain bearish, with less pressure and possible short-term correction. Any recovery above 1.0800 can change the direction, at least in the short term. It can be different for a bit longer period, and the trend changes above the 1.0800
