EUR/USD trades softer beneath 1.1050, sandwiched between support/resistance ahead of Powell speech

• EUR/USD is a little weaker below 1.1050 in a quiet start to the week, amid a lack of fresh catalysts.
• The pair is currently caught between support and resistance as it awaits remarks from Fed’s Powell and further geopolitical developments.

EUR/USD is a touch weaker just below the 1.1050 level in a quiet start to the week, amid a lack of pertinent, market-moving fundamental catalysts regarding the Russo-Ukraine war or other major themes (central banks and economics). For now, EUR/USD price action remains capped by the 21-Day Moving Average which is currently around 1.1080, as has been the case for the past three sessions. But to the downside, an uptrend from the earlier March lows in the 1.0800 area continues to offer support ahead of last Thursday and Friday’s lows just above 1.1000.

Technically speaking then, continued contained price action on Monday seems a good bet, though investors will be monitoring a speech from Fed Chair Jerome Powell, with the big guy slated to speak from 1600GMT. Powell isn’t likely to deviate from his remarks at last week's post-Fed policy announcement press conference when the bank lifted interest rates by 25bps for the first time in three years and signaled plans to lift rates at every remaining meeting this year. That means FX market trading opportunities are likely to remain fairly limited for the rest of the day.

Geopolitics is the wild card as Russo-Ukraine peace talks continue (no signs of progress towards a ceasefire just yet) and with EU leaders reportedly mulling a Russian oil import embargo. There is an EU Foreign Affairs Meeting on Monday that could produce some headlines on the matter that traders should be aware of; an EU embargo of Russian oil is a downside risk for the Eurozone economy and thus the euro. Looking ahead to the rest of the week, aside from geopolitics, the main catalysts will be Fed speak (with policymakers appearing every day) and US and Eurozone flash PMIs for March.

Hawkish commentary from Fed policymakers James Bullard and Christopher Waller last week spurred increased bets that the Fed might hike interest rates by 50bps at its next meeting, so traders should be on notice for further hawkish remarks that could provide downside risk to EUR/USD. Flash PMIs, meanwhile, will give an early indication as to how the Ukraine war is impacting sentiment. Should a bearish combination of negative Russo-Ukraine updates, weaker than expected Eurozone PMIs and hawkish Fed commentary spur a downside break of EUR/USD’s recent uptrend and a move back under 1.1000, the door would be opened to a retest of last week’s 1.0900ish lows.