EUR/USD Price Analysis: Retreats 140-pips from 1.1100 towards 1.0980s

• The euro dropped 140-pips vs. the greenback, erasing Wednesday’s gains.
• ECB kept rates unchanged as it aims to lift rates by the end of the year.
• EUR/USD Price Forecast: Downward biased, might reach the YTD low, and once cleared, 1.0774 is on the cards.

The single currency faded Wednesday’s rally, which once reached the 1.1100 mark, the EUR/USD reversed its curse, nose-diving 140-pips, post-ECB meeting amid a risk-off market mood, courtesy of Russia-Ukraine talks stalling as the war continues. At 1.0985, the EUR/USD reflects investors’ risk-aversion.

On Thursday, the European Central Bank (ECB) decided to keep rates unchanged and stated that it would stop pumping money to the financial markets this summer. “Since the ECB now sees its inflation target effectively achieved, it is likely to raise its key interest rate twice this year, by 25 basis points each time,” Commerzbank’s chief economist, Joerg Kraemer, noted.

Aside from this, the US economic docket featured the Consumer Price Index (CPI) for February, which came at 7.9% y/y, while the so-called Core CPI, excluding volatile items like food and energy, rose by 6.4% y/y, both figures in line with expectations. “Last month’s CPI data does not fully capture the spike in oil prices following Russia’s invasion of Ukraine on February 24, when prices shot up more than 30%,” according to Reuters.

The EUR/USD overnight was subdued near the 1.1100 mark though a bit short. Once ECB’s monetary policy decision crossed the wires, the EUR/USD climbed above the 1.1100 mark, followed by a retracement, when traders assessed the decision, alongside the market sentiment hit, on Russia-Ukraine developments.

EUR/USD Price Forecast: Technical outlook

EUR/USD path of least resistance is downwards, as the pair remains trading within Pitchfork’s descending channel. It is worth noting that the parallel trendlines acted as resistance, as Thursday’s price action pierced the 1.1100 mark, though the rally stalled at the parallel line between the central and top-trendline Pitchfork’s channel (marked by a circle).

The EUR/USD first support would be Pitchfork’s central line around the 1.0940-50 area. Once cleared, the next demand area would be the YTD low at 1.0806 March 7, followed by 1.0774 May 2020 lows.