EUR/USD sees 1.1650 ahead of a thin Tuesday

The EUR/USD is trading into 1.1650 ahead of Tuesday's European markets, and market sentiment continues to twist in the new week.

The Euro capitulated on Monday after Germany's political fracturing took over headlines on the weekend and into the start of the week, with the CDU/CSU party coalition coming to loggerheads over immigration deals made with other EU countries, though the issue appears to have been patched up German Chancellor Angela Merkel.

It's a thin calendar for the Euro on Tuesday, and the lack of actionable releases will see market sentiment take front and center. Equities markets continue to be nervous in the run-up to June 6th, which sees the US impose a raft of tariffs on Chinese goods, and markets are recoiling ahead of the date as the ramping up into a trade war between the US and China threatens to destabilize global markets.

EUR/USD levels to watch

As noted by FXStreet's own Haresh Menghani, "the technical picture presents a neutral outlook but a descending triangular formation on daily charts suggests an extension of the bearish slide. Moreover, the fact that the pair remains well below its short/medium/long-term moving averages further reinforce the negative outlook and would be reaffirmed on a decisive break through the 1.1600 handle.

Below the mentioned support, the pair is likely to accelerate the fall back towards retesting YTD lows support near the 1.1510-1.1500 region. A follow-through selling would mark a fresh bearish breakdown and pave the way for an extension of the downward trajectory."