The euro is now trading flat. On Friday, it remained almost unchanged. There are two reasons for its sluggish movements.
Firstly, there is no fresh news on the Russia-Ukraine conflict or sanctions. Neither Russia nor Western states have made any statements, especially regarding the tightening or easing of the sanctions. Perhaps these are signs that the situation is stabilizing slowly but surely.
Secondly, the macroeconomic calendar is completely empty. Therefore, there were no drivers for the pair.
This is why traders should pay attention to fundamental factors. Reportedly, the EU and the US are preparing a new package of sanctions against Russia. However, new sanctions are unlikely to be harsh as they will mostly target individuals and several companies.
Some media sources claim that EU sanctions may include an embargo on Russian commodities, in particular oil. If so, such a decision would be disastrous for Europe as well as for the whole world. Without Russian oil, prices for all energy commodities will skyrocket.
Two weeks ago, the EU refused to take this step for the simple reason that it was unable to find the necessary amount of oil and gas elsewhere. So, the imposition of an embargo is sure to deliver a severe blow to the economy. Investors are extremely worried about the likelihood of such a scenario. As a result, the euro is unlikely to rise given the market uncertainty.
The volume of long positions on the euro/dollar pair has declined after the price reached the resistance area of 1.1120/1.1180. The US dollar managed to add gains amid the price retracement. The euro is now moving within the medium-term downtrend. However, there is a correction in its structure.
The RSI indicator approached the overbought zone at the moment of touching the resistance area on the 4H chart. It once again confirmed a downward reversal of the pair. Currently, the indicator is moving near the 50 midline. The downward movement may strengthen if the pair crosses the line from top to bottom.
The Alligator indicator signals a corrective movement on the 4H chart. Moving averages are pointed upwards. On the daily chart, the Alligator indicator shows a downtrend in the medium term. There are no intersections between the moving averages.
Outlook
The US dollar is expected to keep recovering. The euro/dollar pair is likely to drop further if it holds below 1.0990. If so, it may fall to 1.0900–1.0800.
Alternatively, the price may consolidate above 1.1200 on the 4H chart.
The complex indicator analysis gives a sell signal on the short-term and intraday charts due to the price reversal from the resistance area. Technical indicators also signal short positions on the medium-term charts due to the ongoing downtrend.
