The EUR/USD currency pair was under strong downward pressure on Monday, trading firmly below all of its moving averages. Heightening conditions of trade war between the US and China further increased the demand on the US dollar. Consequently, the euro depreciated sharply. This movement reflects a broader sentiment in the market as traders position themselves ahead of key economic data releases scheduled for Tuesday.
Throughout the European trading session, EUR/USD fell to a low of 1.1072. After jumping in reaction to the American session open, stabilizing in turn near the 1.1110 mark. The prevailing market forces are thrusting the currency pair into a slight bearish movement. Technical indicators are pointing to more downside in the near term.
1.1195 as the 200 Simple Moving Average (SMA) has turned out to be a major resistance level. This presents a barrier to any upward mobility. The 20 SMA, located over the 200 SMA, is currently pushing down in a strong bearish direction. This positioning is a testament to the strength of sellers in today’s market. It suggests that the bearish sentiment may persist in the short term.
Economic data that could most impact the EUR/USD Market participants are keenly aware of key reports coming up that can sway the currency pair. The US is just days away from releasing its April Consumer Price Index (CPI) data. This data has the potential to provide important clues about inflation persistence and help guide future Federal Reserve policy. Germany will release its May ZEW Survey Economic Sentiment. Depending on how it is received, this report could prove pivotal in shaping popular perceptions on the eurozone economy.
Technical analysis shows that EUR/USD has continued its plunge beneath a currently mildly bearish 20 SMA. Though technical indicators have slowed their slide, all still languish in negative territory. The current Relative Strength Index (RSI) is about 23, signifying that the currency pair is extremely oversold. These kinds conditions can be very indicative that a rebound is coming sooner rather than later, but the bearish momentum is still very strong.
If such bullish momentum were to continue, analysts predict that EUR/USD could retest the psychological barrier of 1.1000. The daily chart shows continuing strong downward momentum, adding confirmation to this bearish view. Traders had been waiting for the latest economic reports with bated breath. They’re monitoring long-term geopolitical influences, keeping a wary eye out for any change in mood.