- EUR / USD remains on the defensive on Tuesday.
- The major Wall Street indices fall sharply as market sentiment deteriorates.
- The US Dollar Index clings to daily gains above 91.00.
The pair EUR/USD it fell below 1.2000 for the first time in nearly two weeks on Tuesday. Although the pair managed to erase a portion of its daily losses in the last hour, it is still down 0.3% on the day at 1.2027.
The market valuation of the USD continues to impact the movements of the EUR / USD. Following Monday’s slide, the US dollar index (DXY) gained traction on Tuesday and the dollar found demand a safe haven amid market risk aversion. Reflecting the depressing mood, the top three Wall Street indices are down between 0.7% and 2.2% and the DXY is rising 0.25% to 91.20.
Hours earlier, US data revealed that factory orders rose 1.1% in March, compared with analysts’ estimate of a 1.3% increase. Furthermore, the IBD / TIPP economic optimism index fell to 54.4 in May from 56.4 in April.
No other US macro data will be released and the broad-based USD strength is likely to force the EUR / USD to close lower.
On Wednesday, Markit’s services PMI for the euro area and the US will get a new boost. Additionally, the ISM services PMIs and the ADP job change will also be on the US economic agenda.
EUR / USD short-term outlook
UOB Group currency strategists believe that the EUR/USD it could push lower with a break below 1.1975.
“The recent positive phase has run its course and the short-term bias is tilting to the downside. That said, the EUR has to break the main support at 1.1975 before a more sustained (and considerable) pullback can be expected.” strategists said. “At this stage, the outlook for a breakout of 1.1975 is not high, but it would increase unless the EUR moves above 1.2105 in these few days.”
Technical levels
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