EUR/USD Forecast: Sellers are not done yet

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.0259

Germany is at risk of losing all gas provisions from Russia in less than a week.
US growth-related data will be out on Wednesday, alongside FOMC Minutes.
EUR/USD trades at its lowest in 20 years and could fall further.

The EUR/USD pair plunged to a 20-year low of 1.0234, now trading a handful of pips above the level. The risk-averse environment favored the dollar since early in the Asian session, but European news fueled the fire and triggered a massive sell-off of high-yielding assets. Concerns revolve around a global recession amid persistent inflationary pressures and slowing economic progress.

S&P Global published the final readings of the June EU Services and Composite PMIs. The figures showed that growth across the EU slowed to a 16-month low. Services activity increased at a weaker rate, whilst goods production fell for the first time in two years.

At the same time, German Economy Minister Robert Habeck noted that the energy industry crisis could have a negative impact on financial markets. He did not rule out intervening gas prices. Since Russia curbed its gas flows to the country, Germany fears a complete blackout of Moscow’s provision, as Russia will temporarily shut down the NordStream-1 pipeline on July 11 for annual maintenance.

On Wednesday, the EU will release May Retail Sales, while Germany will publish Factory Orders for the same month. More relevantly, the European Commission will release Economic Growth Forecasts. Across the pond, the US will unveil the June ISM Services PMI, foreseen at 54.5, while S&P Global will release its own estimate. In the American afternoon, the attention will be on the FOMC Meeting Minutes.

EUR/USD short-term technical outlook

The EUR/USD pair trades in the 1.0250 price zone ahead of the Asian opening, barely correcting extreme oversold conditions. The daily chart shows that the bearish momentum remains strong, as technical indicators head firmly lower within negative levels and the pair plunged below a bearish 20 SMA.

In the near term, and according to the 4-hour chart, the pair is developing roughly 150 pips below a bearish 20 SMA, which accelerates south below the longer ones, reflecting sellers’ strength. Technical indicators have recovered modestly, but the RSI remains within oversold levels without signaling increasing buying interest. The 1.0330/40 price zone should provide strong resistance, and as long as sellers defend the level, chances of a slide to parity in the upcoming sessions remain.

Support levels: 1.0230 1.0180 1.0135

Resistance levels: 1.0290 1.0335 1.0380

View Live Chart for the EUR/USD

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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