We'll start off with a look at EUR/USD as sanctions against Russia are also making things tough for the outlook in Europe. There are worries about regional banks' exposure to Russia and also the true cost of surging energy prices in general. The latter in particular will be a major burden to consumers and that isn't great for the economic outlook.
Add to the fact that markets are now less convinced that the ECB would tighten policy significantly (it was a bit of a head scratcher as to why traders did get ahead of themselves in the first place) and rampant inflation pressures, that is a bad recipe for how things are going to play out in the region in the months ahead.
All of this comes despite the more resilient showing by the economy in the past few months, even in dealing with the spread of the omicron variant. Yes, COVID-19 is still an issue in the world.
The pressure of all of that is weighing on EUR/USD as price falls back below 1.1100 to its lowest since May 2020.
There is some minor support around 1.1040 but if price does track below 1.1000, that's a major level to give way and we could see euro downside accelerate as a result. In turn, that will feed through to dollar strength so do keep an eye on the chart as it does have a few implications for what comes next.
Besides this, there is also the technical vulnerability shown by EUR/GBP:
If anything, the pair is perhaps more important for euro sentiment than what EUR/USD may suggest as it indicates a potential break of key support at 0.8300. That has been a level that has held since 2017. A break there would see a slippery slope towards 0.8000 next and that will also feed into further euro weakness (and pound strength) in the sessions ahead.
Besides that, EUR/CHF has also taken out the April 2015 lows and is trading back below 1.0200. That is the lowest since January 2015 and amid ongoing Russia-Ukraine tensions, it just piles further pressure on the euro as regional investors seek safety flows in the meantime.
