EUR/USD pares weekly gains around 1.1100 as Ukraine-led anxiety intensifies

• EUR/USD bulls pause around a fortnight top after four-day winning streak.
• ECB policymakers tried to tame inflation fears emanating from Ukraine-Russia crisis but failed.
• DXY part ways from downbeat Treasury yields as market sentiment dwindles.
• Xi-Biden call, second-tier data from the bloc may entertain pair traders.

EUR/USD remains pressured around 1.1085, printing the first negative daily performance in five during early Friday morning in Europe. The pair’s latest weakness could be linked to the market’s risk-off mood amid mixed signals from the Ukraine-Russia front, as well as escalating inflation fears.

Although diplomats from Ukraine and Russia haven’t yet left the negotiation table, despite tiring peace talks, Turkey’s efforts to have Russian President Putin and his Ukrainian counterpart Volodymyr Zelenskyy on the talks keep traders hopeful. On the contrary, the Western warning over Moscow’s likely usage of chemical weapons and China’s likely readiness to support the Russian invasion of Ukraine weigh on the market’s fear.

Elsewhere, the inflation woes renew with the firmer prices of oil, as well as upbeat inflation data from the Eurozone. On Thursday, final readings of the bloc’s headline inflation numbers for February crossed the initial forecasts. Even so, multiple policymakers from the European Central Bank (ECB), including President Christine Lagarde, tried to tame the fears of faster monetary policy tightening.

It’s worth noting that a fresh increase in China’s daily covid numbers, after a two-day reduction from record readings, joins fears of Russia’s default to weigh on the sentiment and the EUR/USD prices.

Amid these plays, the US Treasury yields remain downbeat and the stock futures also print losses by the press time. However, the US Dollar Index (DXY) snaps a three-day downtrend but stays negative on a weekly basis.

Looking forward, details of a call between US President Joe Biden and his Chinese counterpart Xi Jinping will be the key for the market’s moves and the EUR/USD. Also important will be Eurozone Labor Cost for the fourth quarter (Q4) Trade Balance for January.

Technical analysis

21-DMA challenges EUR/USD’s immediate upside around 1.1100 but major attention is given to the horizontal line comprising multiple levels marked since late January and a five-week-old descending resistance line, around 1.1120.

Given the firmer MACD and ascending RSI line, not overbought, EUR/USD prices are likely to cross the aforementioned key hurdles.