- The EUR/USD pair is undergoing heavy selling as the US dollar continues to rise amid risk aversion.
- Recession fears as Germany’s energy crisis deepens adds pressure to the euro.
- The sell-off in Treasury yields does not support the pair.
The EUR/USD it is falling like a house of cards, having given way to the 1.0200 area amid intense buying pressure around the US dollar. The pair has bottomed in the last hour at the 1.0172 level, a new seven-day low.
The dollar remains the safest asset as disappointing Chinese data and resurgent growth fears have shaken investor sentiment.
Risk aversion flows continue to dominate even at the start of US trade, while the Manufacturing Empire survey and the NAHB housing index, which came in negative, do not deter dollar bulls.
Markets prefer to bet on the dollar ahead of Wednesday’s FOMC minutes, which could reveal Fed policymakers’ intent on the magnitude of future rate hikes. The minutes could influence the market’s assessment of the Fed’s interest rate hike in September, ultimately weighing on dollar valuations.
Meanwhile, the sentiment-driven sell-off in US Treasury yields does not lend any support to the cross. The currency pair is also hurt by growing recession risks in the Eurozone. Europe’s economic powerhouse, Germany, could slip into recession amid a mounting energy crisis, as receding Rhine waters make navigation on the river more difficult and aggravate the supply problem.
Further upstream at Kaub, a known shipping bottleneck where the Rhine is narrow and shallow, the reference level dipped below 40 centimeters, which could likely attenuate the carbon count among the main cargoes that They move through the waterway.
At the last minute, Finance Minister Robert Habeck declared that “Germany had to introduce its new rate to help utilities cover the cost of replacing Russian supplies or else its energy market would go under.” “. Euro bulls shrugged off Habeck’s comments amid relentless demand for dollars.
EUR/USD: Technical levels
Source: Fx Street
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