- Selling pressure around EUR/USD remains unchanged.
- German industrial production surprised to the downside.
- Chairman Powell will focus investors’ attention during the American session.
Sellers continue to control sentiment in global markets and drag EUR/USD briefly below the 1.0700 level at the start of the European session on Tuesday.
EUR/USD remains on the defensive awaiting Powell
He EUR/USD falls for the fourth consecutive session and briefly tests the 1.0700 region on Tuesday.
The improving sentiment around the dollar, the resurgence of risk aversion and increased caution ahead of Fed Chairman Jerome Powell’s scheduled European afternoon speech keep the pair under additional bearish pressure in the first half of the week and underpin strong rejection from 2023 highs above 1.1030 recorded just four days ago.
Early in the session, the data has shown that German industrial production contracted more than expected, by 3.1% m/m in Decemberwhile France’s trade deficit widened more than expected to 14.93 billion euros also in December.
In the US, it is expected that the President Powell interview at the Economic Club of Washington grab all the attention later during the American session. The results of the trade balance and the change in consumer credit will be published in the US economic calendar.
What can we expect around the EUR?
The sharp EUR/USD sell-off after the NFP of the US continues without diminishing on Tuesday and drags the pair to briefly test multi-week lows below the 1.0700 level.
Meanwhile, the price action around the European currency should continue closely following the dynamics of the dollar, as well as the possible next movements of the ECB after the central bank raised its rate by 50 basis points at its meeting last week.
Returning to the euro zone, it seems that the concern about the recession has dissipated, although it continues to be an important factor in sustaining the recovery of the common currency, as well as the hawkish speeches of the ECB.
At time of writing, EUR/USD is down 0.08% on the day, trading at 1.0716. A break of 1.0697 (Feb 7 low) would target 1.0662 (55-day SMA) en route to 1.0481 (Jan 6 low). On the other hand, the next bullish barrier is located at 1.1032 (2 February high), followed by 1.1100 (round level) and 1.1184 (31 March 2022 low).
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.