Parity Turns into Resistance for EUR/USD Confirming the Bearish Bias
Skerdian Meta • 2 min read
The Euro has been bearish since the beginning of this year, as the European Central Bank hesitated to raise rates until July, while the FED and other major central banks had started doing so early this year. Besides that, the conflict in Ukraine has also been weighing on investor confidence in the Eurozone.
Now energy rationing is coming as winter approaches, with the European politicians putting the public through a “sacrifice” as Manel Macron said. This will weigh further on the Euro, as the industry will suffer. The Eurozone economy is heading into a recession already and this will give it the final push.
EUR/USD H4 Chart – The 20 SMA Rejected the Price
EUR/USD reversing lower after failing at parity which has turned into resistance
German Cabinet Approves Energy-Saving Measures
- The measures will reduce gas usage by 2% to 2.5% all in all
Part of the measures is limits on lighting in public spaces. With some parts of Europe set to face the potential for power rationing or rolling blackouts this coming winter, Germany is actively trying to avoid that but we’ll see if these measures will be enough. In any case, soaring energy prices on their own already won’t be of much comfort. The year-ahead baseload power price in Germany has crossed €600/MWh again today.
French President, Emmanuel Macron Commenting
- Effort and sacrifice needed to brave through winter
- It is the end of a certain “carefreeness” in the world
- We are going through a rather “big shift, a big change”
- “Freedom has a cost” (referring to the Russia-Ukraine conflict)
- The warning delivered is to ministers but in general, he is cautioning that France needs effort and sacrifice to get through the current tough times – especially with a rather harsh winter approaching. As much as the foreshadowing has been well telegraphed, it still feels like Europe as a continent is not too prepared for the months ahead. And that will be a major worry for the euro and the ECB.