The EUR/USD is Likely to Reach its March 24 Low
The pair is facing a number of headwinds, including rising interest rates in the United States and the war in Ukraine.
Introduction
The EUR/USD has been on a downward trend since the start of the year, and it is now trading at its lowest level since March 2020. There are a number of factors that could contribute to the pair reaching its March 24 low of 1.0469.
In this thesis, I will discuss the factors that could contribute to the EUR/USD reaching its March 24 low. I will also discuss the implications of this for investors.
Rising Interest Rates in the United States
One factor that could contribute to the EUR/USD reaching its March 24 low is rising interest rates in the United States. The Federal Reserve is expected to raise interest rates several times in 2023, which will make the US dollar more attractive to investors. This could lead to a sell-off in the EUR/USD.
The US dollar is the world’s reserve currency, and it is often seen as a safe haven asset. When investors are worried about the global economy, they often turn to the US dollar. This is because the US dollar is seen as being relatively stable and secure.
The Federal Reserve is expected to raise interest rates in order to combat inflation. Inflation is currently running at a 40-year high, and the Federal Reserve is under pressure to take action. Raising interest rates is one way to combat inflation.
Raising interest rates will make it more expensive for businesses to borrow money and invest. This could lead to a slowdown in economic growth and corporate profits, which could hurt the stock market.
The stock market is a major driver of the EUR/USD. When the stock market is doing well, the EUR/USD tends to appreciate. When the stock market is doing poorly, the EUR/USD tends to depreciate.
If the Federal Reserve raises interest rates and the stock market declines, it could lead to a sell-off in the EUR/USD. This could push the pair down to its March 24 low of 1.0469.
The War in Ukraine
Another factor that could contribute to the EUR/USD reaching its March 24 low is the war in Ukraine. The war has created a lot of uncertainty in the global markets, and this has weighed on the euro. The war could also lead to a slowdown in the European economy, which could further hurt the euro.
The euro is the currency of the European Union, and the European Union is a major trading partner of Ukraine. The war in Ukraine has disrupted trade between the European Union and Ukraine, and this has hurt the European economy.
The European economy is already facing a number of challenges, including high inflation and rising interest rates. The war in Ukraine could make these challenges even worse. If the European economy slows down, it could lead to a sell-off in the euro. This could push the EUR/USD down to its March 24 low of 1.0469.
Technical Resistance at the 1.06 Level
Finally, the EUR/USD is facing technical resistance at the 1.06 level. If the pair breaks below this level, it could open the door to a move down to the 1.0469 level.
Technical analysis is a method of analyzing financial markets that uses historical price data to predict future price movements. Technical analysts believe that past price movements can be used to identify trends and patterns that can be used to predict future price movements.
The 1.06 level is a significant level for the EUR/USD. The pair has not been below this level since March 2020. If the pair breaks below this level, it could open the door to a move down to the 1.0469 level.
Conclusion
The EUR/USD is facing a number of headwinds, including rising interest rates in the United States and the war in Ukraine. These headwinds could contribute to the pair reaching its March 24 low of 1.0469. Investors should be prepared for the possibility of a move down in the pair and should have a plan in place to protect their portfolios.
