• EUR/USD gained positive traction on Friday and snapped a six-day losing streak to the multi-year low.
• The risk-on impulse undermined the safe-haven USD and prompted short-covering around the pair.
• Concerns about the economic fallout from the Ukraine crisis should continue to cap gains for the euro.
• Traders now eye the flash Eurozone CPI and the US Core PCE Price Index for some meaningful impetus.

The EUR/USD pair built on its steady intraday recovery move through the early European session and climbed to a fresh daily high, closer to mid-1.0500s in the last hour.

The pair witnessed some short-covering move on the last day of the week and for now, has snapped a six-day losing streak to the five-year low, around the 1.0470 area touched the previous day. A turnaround in the global risk sentiment - as depicted by a generally positive tone around the equity markets - prompted undermined the safe-haven US dollar. This was seen as a key factor that extended support to the EUR/USD pair, though any meaningful upside still seems elusive amid concerns about a brewing energy crisis in Europe.

The worries resurfaced after Russia announced a plan to halt gas flows to Poland and Bulgaria amid a standoff over fuel payments from “unfriendly” buyers in rubles. It is worth mentioning that the EU gets about 40% of its gas and 30% of its oil from Russia, and has no easy substitutes if supplies are disrupted. This could make it difficult for the European Central Bank to tighten its monetary policy, leaving it lagging far behind the Fed, which, in turn, should act as a headwind for the shared currency and cap the EUR/USD pair.

The Fed is expected to hike interest rates by 50 bps when it meets on May 3-4, and again in June and July, and ultimately lift rates to around 3.0% by the end of the year to curb soaring inflation. The bets were reaffirmed by hawkish remarks from influential FOMC members last week, including Fed Chair Jerome Powell. This, along with the deteriorating global economic outlook amid prolonged COVID-19 lockdowns in China, should continue to benefit the buck and attract fresh selling around the EUR/USD pair at higher levels.

Hence, it will be prudent to wait for strong follow-through buying before confirming that the recent bearish trend has run its course and positioning for further intraday gains for the EUR/USD pair. Market participants now look forward to the release of the flash Eurozone consumer inflation figures for a fresh impetus. Later during the early North American session, traders will take cues from the release of the Fed's preferred inflation gauge - the core PCE Price Index, which should produce some trading opportunities.

Technical levels to watch