August 22, 2022 17:36:07
The Euro fell to a 19-year low against the greenback extending the previous week’s downside momentum. The recession fears in the eurozone and the strong USD kept the pressure on the shared currency.
In the recent development, the Russian state-owned natural gas exporter Gazprom said it would halt the Nord Stream natural-gas pipeline to Germany for three days owing to maintenance. The natural gas price approached the €300-per-megawatt-hour mark. Further, investors are bracing for ECB monetary policy meeting accounts due on Thursday to have a clue about the pace of the rate hike.
In addition, the latest data revealed that the Euro Area economy grew 0.6% in Q2, below the market expectations of 0.7% in August.
On the other hand, the U.S. dollar Index pierced above the 109.0 level, its highest level since September 2002. The move was sponsored by hawkish comments from several Fed policymakers. Louis Fed President James Bullard supported the 75 bps rate hike in September.
A rate differential between ECB and Fed weighed on the prospects of the single currency.
EUR/USD fell more than 1% as bears took charge
EUR/USD stumble below 0.9950 on the daily chart. The price has been trading in a ‘rectangle; formation since July 6. The spot moved in a range of 1.0085 and 1.0370 for more than a month.
Finally, the price breaks down the range with intense selling pressure, as the pair dropped toward $0.9920 mark.
This fall is accompanied by the formation of ‘Three black crows’, a bearish formation. We expect the bears have full control over the price in the short term until some reversal sign emerges.
A daily close below $0.9920 would open the gates for $0.9800.
On the contrary, a move back toward 1.0000 could result in a dead cat bounce.
The MACD held below the mid-line with increasing selling momentum. The rising downside histogram hints at the weakness in the pair.
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