EUR/USD forecast as recession and Marin Le Pen risks rise

The EUR/USD pair is trading at the lowest level since March 22 as worries of the Eurozone economy coincided with the resurgent Marine Le Pen. The pair is trading at 1.0967, which is the lowest it has been since March 28th. It is also sitting at an important support level.

Marine Le Pen rising

The EUR/USD pair has been in a strong bearish trend in the past few weeks as investors reflect on the gloomy mood of the Eurozone economy. 

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The EU is considering imposing sanctions on Russia after the atrocities in Bucha emerged. While Germany has opposed any natural gas sanctions, a senior EU official hinted that the sanctions were still in the cards.

If the sanctions happen, there is a likelihood that the bloc will go through a recession in the coming months. As a result, the bloc is at a higher risk of stagflation, which will put more pressure on the ECB to act.

Stagflation is a period when high inflation is accompanied by slow economic growth. Recent data from the Eurozone showed that the bloc’s inflation rose by more than 7% in March. Therefore, it will be difficult for the ECB to hike interest rates in a period of recession.

Another reason why the EUR/USD pair is slipping is the growing popularity of Marine Le Pen. The far-right leader has continued seeing more popularity as the French election nears. Her success is beimg credited to her good campaign and the soaring inflation in France. Also, she has continued focusing on the rising inflation in the country.

Meanwhile, the rising hopes of more rate hikes in the US have dragged the pair down. Analysts expect that the Fed will deliver a 0.50% rate increase in May. Besides, the yield curve has inverted.

EUR/USD forecast

The EURUSD price has been in a strong bearish trend in the past few weeks. It has managed to move from the upper side of the ascending channel at 1.1180 to the current 1.0965. This price is along the lower line of this channel and is slightly below the 25-day and 50-day moving averages. The Relative Strength Index (RSI) has also been falling. 

Therefore, with Europe’s risks rising, there is a likelihood that the pair will continue falling as bears target the next support at 1.0800.

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