Heightened tensions with Russia and the risk of an early EU-wide end to dependency on Russian oil are downgrading eurozone growth prospects and weighing on the euro. The EUR/USD pair is set to test the 2017 low of 1.0340, economists at Westpac report. 

EUR/USD needs to regain levels above 1.0760 to reduce downside risks

“The increased costs of energy transition and security, the hit to confidence and potential for further downgrading of regional growth towards recession triggered the slump through 2020’s 1.0635-40 lows and raise potential for a sharp test of 2017’s 1.0340 low, with interim levels of note at 1.0450 and 1.0415.”

“It is difficult to see what data out of eurozone can stem the slide in EUR ahead of the EC’s Eurogroup and FOMC meetings next week.” 

“EUR would now need to regain levels above 1.0760 to reduce downside risks.”