EUR/USD challenges 7-week lows near 1.1180

The selling pressure around the European currency has picked up extra pace on Tuesday, sending EUR/USD to fresh multi-week lows in sub-1.1200 levels.

EUR/USD looks to data, ECB, UK politics

The pair is down for the third consecutive session today, managing to break below the multi-session consolidative theme as well as the critical support area in the 1.1200 neighbourhood.

Spot has resumed the downside pari passu with the upbeat tone surrounding the buck in response to shrinking bets for a large interest rate cut by the Federal Reserve at the July meeting. In fact, market consensus appears to have practically priced in a 25 bps rate cut next week.

Additionally, the likeliness of new easing measures to be announced at the ECB meeting on Thursday keep the sentiment around EUR depressed for the time being.

In today’s docket, the European Commission will publish the preliminary reading of the Consumer Confidence gauge for the current month. Across the pond, the housing sector will once again be in the limelight with  the release of Exiting Home Sales during last month.

In addition, a new UK Prime Minister will be announced around midday in Europe, with Boris Johnson most likely to succeed Theresa May at Number 10.

What to look for around EUR

The inability of the pair to clear the important resistance area in 1.1280/90 has encouraged sellers to return to the markets and drag EUR back below the 1.1200 level, threatening to visit the key contention area in the 1.1181/76 band. Further out, occasional bullish attempts should be seen as a short-lived against the backdrop of renewed and increasing speculations of another wave of monetary stimulus from the European Central Bank as early as this week’s meeting, including interest rate cuts, the resumption of the QE programme and potential changes in the forward guidance.

EUR/USD levels to watch

At the moment, the pair is retreating 0.21% at 1.1185 and faces immediate contention at 1.1181 (low Jun.18) seconded by 1.1176 (low Mar.7) and finally 1.1106 (2019 low May 23). On the upside, a breakout of 1.1286 (high Jul.11) would target 1.1313 (200-day SMA) en route to 1.1412 (high Jun.25).