The pair fell to a low of 0.9915 earlier before hugging 0.9950 levels on the day, being little changed. As much as the dollar is firmer today, there is still some stubbornness to EUR/USD breaking lower for the time being.
The chart doesn't lie though. So long as price action keeps below parity, the bias is still for another leg lower in the pair. Perhaps a large set of option expiries at 0.9900 for tomorrow is keeping things in check. But if we do get a firm break and daily close below that, I would argue it will trigger the next leg lower in the pair.
The thing to note about EUR/USD is that the fundamental divergence continues to play out in rather straightforward fashion. The Fed remains resolute in tightening policy further while the ECB's latest remarks at the end of last week sound more like a central bank that is hurrying to get all their rate hikes in before the window closes.
The fact that European energy prices continue to shoot higher in rather parabolic fashion isn't helping whatsoever.
A recession is almost a given in Europe but while US growth is slowing, the Fed can still get away with pointing to a soft landing - for now at least. And that is the difference and that difference has been enough to see EUR/USD grind from 1.1400 to 1.0000 so far this year with more potential for a further move to the downside.
