EUR/USD faces stiff barricades around 1.0700 due to weak Eurozone economic outlook

The EUR/USD pair has witnessed some selling interest after facing stiff barricades around 1.0700 in the early European session. The major currency pair is consistently defending the crucial support of 1.0670, therefore, a breakdown of the same would result in wider bearish ticks. The Euro has come under pressure as investors are anticipating a bleak economic outlook in Eurozone.

S&P500 futures generated mild gains in the Asian session. US equities registered a positive settlement on Tuesday as more dovish catalysts are adding to Federal Reserve’s (Fed) interest rate policy filters. The US Dollar Index (DXY) has rebounded to near 104.18. On a broader note, the USD Index is inside the woods amid a lack of economic events this week.

The demand for US government bonds has improved amid a mild decline in hawkish Fed bets. As per the CME FedWatch tool, more than 80% of the chances are in favor of a steady interest rate policy. This has led to a decline in the 10-year US Treasury yields to near 3.66%.

On the Eurozone front, the German economy is going through a rough phase due to higher interest rates by the European Central Bank (ECB). The German economy has already shown a recession after a consecutive contraction in quarterly Gross Domestic Product (GDP). Adding to that, German Factory orders are consistently declining, indicating weak demand.

Apart from that, Eurozone Retail Sales data released on Tuesday also failed to stand expectations. Monthly Retail Sales remained stagnant while the street was anticipating an expansion by 0.2%. Annual Retail Sales contracted by 2.6% vs. the expectations of -1.8%. In spite of the poor economic outlook, ECB President Christine Lagarde is highly likely to raise interest rates further considering persistence in core inflation.