EUR/USD drops further toward 1.1320

• EUR/USD flat for the week, bearish on Friday.
• Dollar strengthens amid risk aversion.
• Euro finds support after a report shows ECB edging toward 2022 rate hike.

The EUR/USD extended the decline during the American session and printed a fresh low around the London fix at 1.1325. The pair remains under pressure as the US dollar gains momentum across the board. The euro trimmed losses after a report mentioned European Central Bank officials are leaning toward rising rates in 2022 and have begun discussing the end of QE.

Fear ahead of the weekend

Caution prevails across financial markets ahead of the weekend. After the worst day since November, the Dow Jones is falling on Friday by 0.15%. The risk aversion sentiment is pushing the dollar higher across the board.

The EUR/USD is about to end the week flat around 1.1330, after being capped to the upside by 1.1400 while at the same time being rejected from under 1.1300. The short term bias looks neutral. The euro needs to break and hold 1.1400 to gain strength, while a firm slide under 1.1270 should point to more losses.

Next week, attention will remain on the Ukrainian border. On the data front, the February Flash PMIs for the Eurozone and US are due. The other key report in the US will be the PCE. The inflation numbers could have a significant impact on Fed rate hike expectations.

Technical levels