EURUSD plunged to its lowest level since the beginning of April 2017. The currency pair hits a 5-year low of 1.0540 on Wednesday. At the time of wiring, the currency pair traded at 1.0545. The strong bearish momentum is driven by the US dollar rally. The US dollar remains in favour as a haven currency among traders around the world supported by expectations for faster Federal Reserve interest rate hikes boosted demand for the greenback.

One of the other reasons behind the strong Euro sell-off following the reports was that Russia had cut off the flow of gas supplies to Poland and Bulgaria which signaled worsening geopolitical risk in the region. Meanwhile, last week the currency pair received some bullish momentum after the hawkish comments from the ECB Vice President Luis De Guindos. He acknowledged the possibility of an interest rate hike as early as July.

Technically the overall momentum remains bearish. On the downside, 1.0500 is the crucial support area to watch. If the pair breaks below the 1.0500, the slump will quickly extend toward the 1.0460 and 1.0430 marks. However, considering the recent sell-off near-term pullbacks from 1.0500/1.0480 support remain corrective in nature. So, in the short term, the pair may rebound towards the 1.0630/50 zone, a break above this level will confirm a possible move to 1.0760/80.

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