News

EUR/USD drops towards 1.0150 amid risk-aversion, ahead of US data

  • EUR/USD turns south after rejection at 1.0200 as risk-off flows dominate.
  • US dollar finds demand, despite weaker yields and cautious Fed minutes.
  • The euro looks vulnerable amid the deepening EU energy crisis and growth risks.

EUR/USD is heading towards 1.0150, on the defensive amid a risk-averse environment in Thursday’s trading so far.

The US dollar Is finding renewed safe-haven bids, courtesy of brewing geopolitical tensions between the US and China after the former announced formal trade negotiations with Taiwan early this autumn. Additionally, investors assess the Fed July meeting minutes, which revealed that the world’s most powerful central bank is now facing a dilemma in taming inflation while averting recession.

On Wednesday, the dollar reversed gains, in an immediate reaction to a cautious shift in the Fed’s tone on policy guidance. The minutes hinted at a likely slow down in the pace of tightening amid mounting risks to economic growth. The US Treasury yields extended their previous advance amid recession fears while Wall Street indices tumbled.  

Meanwhile, the euro bore the brunt of the downward revision to the Eurozone Q2 GDP print, which came in at 0.6% vs. 0.7% booked in the first estimate. Additionally, the deepening energy crisis in the old continent, thanks to the Russia-Ukraine war and excessive heatwave that has dried up the Rhine river in Germany.

The cargoes carrying coal, food supplies, etc. have been cut down ever since the water level in the Rhine fell below the critical 40 cm level. Markets are expecting the water level to rise above that level during the weekend, which could bring some relief to the shared currency.

Looking ahead, the Eurozone final inflation, US weekly Jobless claims and the speeches by the Fed and ECB policymakers will be closely followed for fresh trading impetus in the main currency pair.

EUR/USD: Technical outlook

“In the 4-hour chart, the risk remains skewed to the downside. The pair is developing below all of its moving averages, with the 20 SMA heading firmly south and crossing below the longer ones. Technical indicators, in the meantime, recovered from their intraday lows but remain below their midlines. Support levels: 1.0150 1.0105 1.0070. Resistance levels:  1.0205 1.0240 1.0280,” FXStreet’s Chief Analyst Valeria Bednarik explains.

EUR/USD: Additional technical levels to watch

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.