EUR/USD Current Price: 1.0175
- Concerns about a global economic slowdown push investors into safety.
- The US Treasury yield curve inverted, hinting at a potential recession.
- EUR/USD is technically oversold, but there are no signs of bearish exhaustion.
The American dollar keeps benefiting from the risk-off environment on Wednesday, and EUR/USD trades at a fresh multi-year low sub-1.0200. The pair fell so far to 1.0165 and trades nearby ahead of the Wall Street open. The global economic slowdown is the main reason behind the market’s dismal mood and the continued demand for safety, spiced with recession fears and overheated inflation.
Stock markets are so far avoiding the collapse, as US indexes benefited from technology stocks on Tuesday, posting modest gains. However, other sectors more related to economic activity suffered sharp losses, in line with the general concerns.
Meanwhile, the US Treasury yield curve inverted, with the 10-year note currently yielding 2.74% and the 2-year note offering 2.81% at the moment, usually understood as a recession warning.
European data further weighed on the shared currency, as Retail Sales in the Union posted a modest 0.2% advance in May, while German Factory Orders in the same month were down 3.1%. The US session will bring the S&P Global PMIs and the official June ISM Services PMI, the later foreseen at 54.5, down from the previous 55.9. Later in the American afternoon, the FOMC will release the Minutes of the latest Federal Reserve meeting.
EUR/USD short-term technical outlook
The EUR/USD pair is sharply down for a second consecutive day, and there are no technical signs of bearish exhaustion. In the daily chart, technical indicators are heading south pretty much vertically, entering oversold territory and reflecting persistent selling interest. The 20 SMA, in the meantime, accelerated south, currently at around 1.0470.
The near-term picture is bearish, as, in the 4-hour chart, technical indicators keep heading lower despite being at extreme oversold levels. At the same time, the pair is developing well below its moving averages, with the 20 SMA accelerating its decline and developing over 200 pips above the current level.
Support levels: 1.0160 1.0120 1.0075
Resistance levels: 1.0220 1.0270 1.0330
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