EUR/USD Forecast: Additional losses are likely if 1.0680 support fails
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UPGRADE- EUR/USD has steadied near 1.0700 following Monday's drop.
- A four-hour close below 1.0680 could open the door for additional losses.
- The dollar is likely to gather strength in case US yields continue to push higher.
EUR/USD has been having a difficult time staging a meaningful rebound following Monday's decline. The risk-averse market environment supports the dollar in the early European session and the pair is likely to extend its slide in case the 1.0680 level turns into resistance.
The data from the eurozone revealed that the Sentix Investor Confidence improved modestly to -15.8 in June from -22.6 in May. This reading came in better than the market expectation of -20 but failed to help the euro find demand.
"As impressive as the improvement in the situation and expectations values may appear at first glance, this is unlikely to mark a turnaround," noted Sentix in its press release.
Rising US Treasury bond yields provided a boost to the greenback at the start of the week and the US Dollar Index climbed to its highest level in two weeks above 102.80. The benchmark 10-year US T-bond yield advanced beyond 3% for the first time in nearly a month on Monday before retreating modestly on Tuesday. In case US yields gain traction in the second half of the day, EUR/USD could come under renewed bearish pressure.
The US economic docket will feature the Goods Trade Balance and Consumer Credit Change data for April. These figures are unlikely to have a significant impact on the dollar's market valuation.
Meanwhile, US stock index futures are down between 0.4% and 0.6% early Tuesday. If safe-haven flows dominate the financial markets in the second half of the day, US T-bond yields could edge lower and limit the dollar's gains. Nevertheless, the greenback should be favoured against the euro as a safer alternative, not allowing EUR/USD to erase its losses.
EUR/USD Technical Analysis
The Fibonacci 23.6% retracement level of the last uptrend forms important support at 1.0680. Earlier in the day, the pair dropped below that level but managed to close above its on the four-hour chart. In case 1.0680 turns into resistance, 1.0660 (100-period SMA) aligns as the next support ahead of 1.0620 (Fibonacci 38.2% retracement) and 1.0600 (200-period SMA).
On the upside, 1.0700 (psychological level) forms interim resistance before 1.0720 (20-period SMA, 50-period SMA) and 1.0760 (static level).
- EUR/USD has steadied near 1.0700 following Monday's drop.
- A four-hour close below 1.0680 could open the door for additional losses.
- The dollar is likely to gather strength in case US yields continue to push higher.
EUR/USD has been having a difficult time staging a meaningful rebound following Monday's decline. The risk-averse market environment supports the dollar in the early European session and the pair is likely to extend its slide in case the 1.0680 level turns into resistance.
The data from the eurozone revealed that the Sentix Investor Confidence improved modestly to -15.8 in June from -22.6 in May. This reading came in better than the market expectation of -20 but failed to help the euro find demand.
"As impressive as the improvement in the situation and expectations values may appear at first glance, this is unlikely to mark a turnaround," noted Sentix in its press release.
Rising US Treasury bond yields provided a boost to the greenback at the start of the week and the US Dollar Index climbed to its highest level in two weeks above 102.80. The benchmark 10-year US T-bond yield advanced beyond 3% for the first time in nearly a month on Monday before retreating modestly on Tuesday. In case US yields gain traction in the second half of the day, EUR/USD could come under renewed bearish pressure.
The US economic docket will feature the Goods Trade Balance and Consumer Credit Change data for April. These figures are unlikely to have a significant impact on the dollar's market valuation.
Meanwhile, US stock index futures are down between 0.4% and 0.6% early Tuesday. If safe-haven flows dominate the financial markets in the second half of the day, US T-bond yields could edge lower and limit the dollar's gains. Nevertheless, the greenback should be favoured against the euro as a safer alternative, not allowing EUR/USD to erase its losses.
EUR/USD Technical Analysis
The Fibonacci 23.6% retracement level of the last uptrend forms important support at 1.0680. Earlier in the day, the pair dropped below that level but managed to close above its on the four-hour chart. In case 1.0680 turns into resistance, 1.0660 (100-period SMA) aligns as the next support ahead of 1.0620 (Fibonacci 38.2% retracement) and 1.0600 (200-period SMA).
On the upside, 1.0700 (psychological level) forms interim resistance before 1.0720 (20-period SMA, 50-period SMA) and 1.0760 (static level).
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