EUR/USD Current Price: 1.0715
US dollar soars across the board amid risk aversion.Stocks tumble, Treasuries rise sharply, commodities slide on China and monetary tightening concerns.EUR/USD under pressure breaks 1.0760, tests 1.0700.
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The EUR/USD dropped on Monday for the third day in a row, breaking the 1.0760 support area and also under the previous April low, hitting 1.0696, the lowest level since March 2020. The euro seems unable to recover ground on a firm basis and remains under pressure as the US dollar keeps rising across the board.
Global equity prices lost ground on Monday. In Wall Street, main indexes extended last week’s losses. The deterioration in market sentiment boosted the demand for safety, pushing the dollar and Treasuries to the upside. Commodity prices tumbled. US yields fell to multi-day lows, not affecting the greenback. The 10-year yield fell to as low as 2.76% after trading near 3% on Friday.
Concerns about interest rate hikes from central banks and lockdowns in China dented investors’ sentiment, weakening EUR/USD that did not benefit from comments from European Central Bank policymakers looking to end the purchase program as soon as possible and suggesting multiple rate hikes before year-end. The hawkish shift has been offset by expectations of a more aggressive tightening from the Fed.
Economic data from the US showed on Monday the Chicago Federal Reserve National Activity Index fell to 0.44 in March (above market consensus of 0.21), down from the previous 0.54 print. The Dallas Fed Manufacturing Business Index unexpectedly declined in April to 1.1 from 8.7. Later in the week, Q1 GDP data from the Eurozone and the US are due.
EUR/USD short-term technical outlook
The EUR/USD remains under pressure and with the negative momentum intact despite oversold readings in some technical indicators. If the euro manages to hold above 1.0700, some consolidation ahead seems likely. A firm break under 1.0700 should clear the way to more losses, targeting initially the 1.0665 zone and below the 2020 March low at 1.0635.
The break under 1.0760 left the euro vulnerable to more losses, a recovery back above it could alleviate the bearish pressure. Above the 20-Simple Moving Average in the four-hour chart at 1.0815, the EUR/USD would gain a support area.
The long term perspective remains negative for EUR/USD. Price is not only approaching 2020 low, but it is also 400 pips above the 2016 low (a 13-year low). From a long-term perspective, a monthly close under 1.0500 would expose 1.0000.
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