EUR/USD Falls Below 1.0150 As EU Recession Fears Grow
Energy-led recession fears put an end to the EUR/USD recovery, with the shared currency tumbling to weekly lows. Meanwhile, the U.S .dollar trades firmly as investors brace for the FOMC decision.
At the time of writing, the EUR/USD pair trades at the 1.0120 area, posting a 0.97% loss on the day, having hit an intra-day low of 1.0107 during the New York session.
Russia announced that the Nord Stream 1 pipeline will operate at just 20% capacity from July 27. The threat of gas shortages increased drastically and so did the recession fears in Europe, especially in Germany and Italy, which are the most dependent on Russian gas.
The yield of the 10-year German Bund has fallen more than 8% and stands at around 0.94%, indicating a higher demand for bonds as the economic outlook gets darker.
Meanwhile, the greenback, measured by the DXY, jumped back above 107.00 and trades 0.7% higher as investors await tomorrow’s FOMC decision. Tightening expectation increased modestly as the WIRP suggests that the markets are pricing 75.1% odds of a 75 bps hike and a 24.9% probability of a 100 bps increase.
From a technical standpoint, the EUR/USD short-term technical outlook remains bearish, according to the daily chart. A bearish 20-day SMA rejected the pair for the fifth time on Tuesday, signaling lack of bullish strength and favoring the bearish case.
The RSI took a big hit and gained a significant negative slope, while de MACD printed a lower green bar that indicates a deceleration of the buying interest.
The next support levels are seen at 1.0100 followed by parity and then the cycle low of July 14 at 0.9952. On the upside, resistance levels stand at the 20-day SMA, currently at 1.0205, followed by 1.0300 and 1.0350.
At the time of writing, the EUR/USD pair trades at the 1.0120 area, posting a 0.97% loss on the day, having hit an intra-day low of 1.0107 during the New York session.
Russia announced that the Nord Stream 1 pipeline will operate at just 20% capacity from July 27. The threat of gas shortages increased drastically and so did the recession fears in Europe, especially in Germany and Italy, which are the most dependent on Russian gas.
The yield of the 10-year German Bund has fallen more than 8% and stands at around 0.94%, indicating a higher demand for bonds as the economic outlook gets darker.
Meanwhile, the greenback, measured by the DXY, jumped back above 107.00 and trades 0.7% higher as investors await tomorrow’s FOMC decision. Tightening expectation increased modestly as the WIRP suggests that the markets are pricing 75.1% odds of a 75 bps hike and a 24.9% probability of a 100 bps increase.
From a technical standpoint, the EUR/USD short-term technical outlook remains bearish, according to the daily chart. A bearish 20-day SMA rejected the pair for the fifth time on Tuesday, signaling lack of bullish strength and favoring the bearish case.
The RSI took a big hit and gained a significant negative slope, while de MACD printed a lower green bar that indicates a deceleration of the buying interest.
The next support levels are seen at 1.0100 followed by parity and then the cycle low of July 14 at 0.9952. On the upside, resistance levels stand at the 20-day SMA, currently at 1.0205, followed by 1.0300 and 1.0350.