EUR/USD Current Price: 1.1794
- Fears dominated the financial world at the weekly opening.
- Stocks plummeted alongside government bond yields amid demand for safety.
- EUR/USD is technically bullish and set to extend its decline in the near-term.
The EUR/USD pair fell to a fresh three-month low of 1.1763, bouncing sharply from the level ahead of Wall Street’s opening and ending the day below the 1.1800 level as risk aversion dominated financial markets on Monday, limiting demand for the high-yielding EUR. Speculative interest is pricing in a slower pace of recovery, worried it might be delayed further due to new coronavirus strains. Mounting inflationary pressures in the US added to the dismal mood, as the Federal Reserve may need to tighten its monetary policy sooner than anticipated.
Stocks plummeted while soaring demand for government bonds sent US yields to their lowest in five months. Data-wise, the EU published May Construction Output, which was up 0.9% MoM and 13.6% YoY. The US will publish the June NAHB Housing Market Index, which printed at 80, below the previous 81 and the expected 82. On Tuesday, Germany will publish the June Producer Price Index, the EU will release the May Current Account, while the US will unveil minor housing-related data.
EUR/USD short-term technical outlook
The EUR/USD pair retains the bearish stance despite bouncing from its intraday low. The upper end of a daily descendant channel contains the upside at around 1.1840. The 4-hour chart shows that a flat 20 SMA capped the upside, while the longer ones keep heading south well above it, skewing the risk to the downside. The Momentum indicator recovered within negative levels, but the RSI indicator consolidates around 44, all of which favor another leg south.
Support levels: 1.1760 1.1720 1.1685
Resistance levels: 1.1840 1.1885 1.1920
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