• EUR/USD comes under downside pressure around 1.1230.
  • ECB easing keeps weighing on investors’ mood.
  • Poor German ZEW survey added to the downbeat momentum.

Sellers are now quickly returning to the single currency and are therefore forcing EUR/USD to recede to fresh multi-day lows in the 1.1230 region. The down move has accelerated after the recent breakdown of the 100-day, 10-day and 55-day SMAs.

Also fanning the downside flames, the German Economic Sentiment deteriorated further for the current month, as per the latest ZEW Survey. On the brighter side, Economic Sentiment in Euroland improved a tad although it is still deep into the negative territory, while the trade surplus widened moderately during May.

Today’s results have prompted investors to shift their focus from the potential rate cuts by the Federal Reserve to the likelihood of a looser monetary policy by the ECB – including rate cuts, QE and changes in forward guidance – against the backdrop of the unremitting economic slowdown in the bloc.

On the technical view, EUR/USD needs to regain the 1.1280/90 band - recent peaks and the 21-day SMA - in order to alleviate the prevailing downside pressure and to allow for a test of the critical 200-day SMA at 1.1321. On the way south, further downside impulse should breach the key support at 1.12 the figure, exposing the 1.1193/76 band, where coincide July low, June 18 low and March low.

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