August 18, 2022 19:09:27
The shared currency refreshes monthly lows below 1.0100 with a bearish sentiment. A rebound in the U.S dollar and weaker Eurozone economic data added woes to the already struggling Euro.
Despite a fall in the benchmark U.S bonds yields, the U.S. dollar index shoots up 107.0 mark, the levels not seen in a month.
Investors continue to assess the uncertainty over the speed of interest rate hikes after dovish FOMC minutes. The market traded with a very cautious note amid concerns about a looming recession.
The U.S. Initial Jobless Claims fell by 2,000 to 250,000 the week ended August 13th, much below the market expectations of 265,000.
On the domestic front, the Euro Area Construction edged up 0.1% on yearly basis, easing from a downwardly revised 2.3% rise in the previous month. Further, the annual inflation rate came at a record high of 8.9% in July as compared to 8.6% in June, and 2.2% on the yearly basis.
The European Central Bank (ECB) is expected to increase by 50bps in September, extending the path adopted by the central bank in July to tame skyrocketing inflation. But the disappointing region’s economic outlook remained a major concern.
As of press time, EUR/USD reads at 1.0091, down 0.87% for the day.
EUR/USD breaks the consolidation on the downside
The EUR/USD pair dropped to test the three-week low near 1.0079. The spot traded in a very narrow trading range for the past few sessions. Finally, it broke below the 1.0100 level.
The bearish trend line from the highs of 1.0774 acted as a strong upside hurdle. As the price faces multiple rejections at the descending trend line.
For the past month, the EUR/USD pair has been consolidating the 1.0270 and 1.0145 range. However, it finally broke and test its lows last in July amid intense selling pressure.
If the selling continues with additional participants, in that case, we expect the price to hit the low made on July 13 at 0.9952.
On the other side of the coin, a move toward 1.0200 could shift the bearish sentiment and induce fresh buying interest.
The RSI (14) trades below 40 and approaches the oversold zone.
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