July 12, 2022 7:33:02
The shared currency continues to grind lower as the fundamentals still favor the bears. The recession fears, the monetary policy gap between Euro Zone and the U.S, and the energy crisis kept the pressure on the Euro intact.
The primary cause for this fall remained the ongoing energy crisis in Europe. If the current situation persisted for an extended period the expert believes it could drag the bloc’s economy faster and deeper into recession. This could place the European Central Bank (ECB) in a strenuous situation—trying to tame inflation and guarding a slowing economy. The central bank is set to raise the borrowing costs for the first time since 2011.
Additionally, the rampant U.S dollar dragged the major to its lowest level since December 2002. The greenback continued to soar and scaled to new highs amid global risk-off mood and hawkish Fed expectations.
Investors braced for another 75 bps increase in the U.S interest rates later this month.
EUR/USD sustains 1.0000
The EUR/USD pair failed to sustain the intraday highs of 1.0055 in the Asian session. It dropped to test the fresh 20-year lows at 1.0005 on Tuesday. The formation of the ‘spinning top’ on May 30 resulted in the bearish momentum in the asset.
The selling picks up further speed as it breaches the critical 20-day Simple Moving Average (SMA) at 1.0613 on June 9.
What’s next?
From a technical point of view, the RSI (14) trades in the oversold zone warn of a probable bounce back or at least to wait for some near-term consolidation or modest bounce back.
The MACD, another momentum oscillator, holds below the midline with a negative bias. It concludes a break of the psychological 1.0000 mark could bring 0.9980-0.9950 into play.
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