EUR/USD set to plummet as euro continues struggling with energy issues

EUR/USD has slipped back below 1.16 ahead of eurozone retail sales. According to FXStreet’s Analyst Yohay Elam, the euro is set to tumble to new yearly lows as King Dollar has all stars aligned.

EUR/USD has been sliding as a surge in US yields boosts the dollar

“Winter is coming – and fears that European households may struggle to pay the heating bills have been weighing on the common currency. Concerns of outright shutdowns in industries in the old continent and abroad are boosting the safe-haven dollar.” 

“King Dollar has returned to its throne, backed by rising bond yields. After returns on 10-year Treasuries stabilized around 1.50%, they staged a breakout to 1.57%, the highest since June – giving an extra impetus to the greenback.”

“On the expenditure front, there seems to be some movement toward a compromise within the Democratic party. The original proposal was for $3.5 trillion over ten years, and the passage of this bill is tied to another smaller bipartisan legislature that is focused on hard infrastructure. News from Washington is set to move markets, but no breakthroughs are likely – potentially another drag for markets and a boost for the safe-haven dollar.” 

“Bears need the price to drop below the 2021 trough of 1.1562 to trigger a more forceful fall. Below 1.1562, the next level to watch is the round 1.15 line.” 

“Some resistance awaits at 1.1590, which provided support on Tuesday. It is followed by 1.1615, which capped the pair on Tuesday.”