- EUR/USD drops below 1.1240, 4-day lows.
- German Economic Sentiment deteriorated further in July.
- US Retail Sales, Fedspeak next of relevance in the day.
The selling pressure around the European currency is now picking up pace and is taking EUR/USD to fresh multi-day lows near 1.1230.
EUR/USD weaker post-ZEW
The pair receded further after the ZEW survey showed the German Economic Sentiment dropped to -24.5 for the current month, missing expectations and extending the negative momentum for yet another month. Still in Germany, the Current Conditions component also ticked lower to -1.1.
On the positive side, the Economic Sentiment in the euro area surprised to the upside at -20.3, while the trade surplus widened to €23.0 billion during May.
Today’s poor results from the calendar add to the ongoing pessimism surrounding the shared currency amidst increasing market chatter of probable rate cuts by the ECB and the most likely scenario of another round of QE.
Later in the NA session, spot will remain under scrutiny via USD-dynamics and the publications of Retail Sales and Fedspeak.
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, triggering the ongoing leg lower. Furthermore, occasional bullish attempts in spot 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 in the near term, via interest rate cuts (July/September), the resumption of the QE programme and changes in the forward guidance. Also weighing on the currency, the dovish stance from the ECB appears reinforced by the recent appointment of ex-IMF’s C.Lagarde to succeed M.Draghi. On the macro scenario, the slowdown in the region looks unremitting and it also reinforces the current accommodative attitude of the central bank.
EUR/USD levels to watch
At the moment, the pair is losing 0.17% at 1.1238 and faces the next support at 1.1193 (monthly low Jul.9) followed by 1.1181 (low Jun.18) and finally 1.1106 (2019 low May 23). On the flip side, a break above 1.1286 (high Jul.11) would target 1.1321 (200-day SMA) en route to 1.1412 (high Jun.25).
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