The USD index is off long-term tops seen last week and was last seen approaching the 97.00 figure
The euro turned slightly positive on Monday, recovering from fresh mid-2020 lows seen around the 1.1120 last week. earlier in the day, the EURUSD pair climbed to the 1.1180 area that capped intraday gains and triggered a slight retreat in recent trading. The common currency now needs to regain the 1.1200 figure in the short term but it looks like the euro will continue to struggle despite some bearish correction in the greenback.
The USD index is off long-term tops seen last week and was last seen approaching the 97.00 figure during the European hours. Should this support give up anytime soon, the index may target 96.90. However, it looks like the prices will stay afloat in the short term, with the broader trend staying bullish. Furthermore, as risk sentiment looks unstable, with investors staying alert amid geopolitical developments surrounding Ukraine, the safe-haven demand could reemerge at any point and push the index north again.
As such, the euro will hardly be able to stage a decisive recovery in the coming days while bearish risks continue to persist, especially as the monetary policy divergence between the ECB and the Federal Reserve is widening. As a reminder, the Fed is widely expected to start hiking interest rates as soon as March.
From the technical point of view, EURUSD could challenge 1.1200 should the 1.1180 area give up anytime soon. However, it looks like a more decisive recovery towards 1.1240 could attract renewed selling pressure surrounding the common currency in the coming days. On the four-hour timeframes, the pair stays below the 20-SMA while the RSI is now pointing south again, adding to a downbeat technical outlook in the immediate term.