Euro (EUR) found support as European leaders were seen coming together to offer Ukraine support. EUR was last seen at 1.0416 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Strong CPI print may aid EUR’s recovery
“An emergency security summit was convened on Sunday. UK PM Starmer said UK, France and ‘one or two others’ would work with Ukraine on a ‘plan to stop the fighting.’ The broader European Council will meet on Thursday to discuss a €20 billion ($21 billion) military package for Ukraine and steps to boost defense spending, including a potential loosening of fiscal rules.”
“Moving away from Ukraine, Trump’s tariff threats remain. He mentioned implementing a 25% tariff on EU although he did not give an effective date. He also stated that the 25% tariff on Canada and Mexico would come into effect on 4 Mar, alongside Chinese imports being slapped with a further 10% tariff. The actual implementation of the tariffs should undermine EUR, but EUR may bounce if there is another pushback.”
“Daily momentum is now showing a clear bias while RSI rose. 2-way trades likely. Resistance here at 1.0420 (21DMA, 23.6% fibo), 1.0510 (100 DMA) and 1.0575 (38.2% fibo retracement of Sep high to Jan low). Support at 1.0360/90 (50 DMA), 1.0280 levels. For the week, CPI estimate is in focus today – a strong print may aid EUR’s recovery – before the ECB meeting (Thu). Markets have already priced in 85bps of cut this year. Any hawkish surprise may see dovish expectations pare back and can be supportive of EUR.”
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