Ukraine woes pressuring EUR/USD

The euro is under pressure against the US dollar as tensions in eastern Ukraine weigh on the currency.

The EUR/USD is trading at $1.3825, down 0.4%, following reports that pro-Russian radicals had taken control of a number of public buildings in eastern Ukraine. The eurozone and in particular Germany rely heavily on Russian natural gas, so if supply lines are disrupted we could see the euro lose further ground.

Christian Noyer of the European Central Bank said the euro’s relative strength was holding back the recovery of the region. Mr Noyer suggested that a looser monetary policy by the ECB could assist the eurozone’s economy as the currency is too strong, as previously mentioned by Chris Beauchamp.

If we continue to see violence in Ukraine, the euro could move towards the 200-hour moving average of $1.3791. If the euro wants to retest the recent high of $1.39, it will have to fill the gap between Friday’s close and Sunday night’s open of $1.3839-1.3884.

Spot FX EUR/USD chart

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