- Recession fears in the Eurozone and the US maintain a cautious climate in the markets.
- EUR/USD falls for the fourth day in a row and trades at levels not seen since December 2002.
After a period of consolidation and range-trading, the EUR/USD resumed its downward run and hit a new low in nearly two decades at 1.0211. The pair remains near 1.0200, bearish tone intact.
RJust back from 1.0350, the euro could improve the current short-term outlook. In the opposite direction, the next support looms at 1.0200 followed by the 1.0145 area.
While the EUR/USD extends the fall, the dollar remains firm with the general cautious climate in the markets due to fears of a recession. Haven assets remain in demand. The euro for its part remains among the weakest currencies for these hours within the group of the G10. The energy crisis is a factor that contributes to negative pressure, in addition to doubts about the effectiveness of the “anti-fragmentation” instrument that the European Central Bank will announce at the next meeting.
Analysts at TD Securities note that the pair has lost the important support at 1.0340 and think that “the path of EUR/USD remains to the downside, with the pair possibly being an irresistible gravitational pull in the short term”.
The German 10-year bond yield hit a new one-month low at 1.16%, while the US benchmark is at 2.82%, just above Tuesday’s low.
background data
The economic reports for these hours are in the background. The market itself has become the main focus of attention. The poor economic expectations continue to reduce the expectations of very aggressive central banks for a long time.
On Wednesday, a rise of 0.2% was known in retail sales for May in the Eurozone, data that was below the expected increase of 0.4%. Previously, factory orders for May in Germany registered a 0.1% rise, which was a positive surprise as the consensus was for a 0.6% decline.
In the US on Wednesday there will be data on the services sector (S&P Global PMI and ISM). In the afternoon of the American session, the Federal Reserve will publish the minutes of the last FOMC meeting.
Technical levels
Source: Fx Street
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