EUR/USD Starts The Week On A Soft Note Amid Energy Concerns
The EUR/USD pair plunged to a fresh two-decade low during European hours as the U.S. dollar preserved its strength, with the DXY index surpassing the 110.00 mark. In addition to the sour market mood, downward revisions of the EU’s PMIs and energetic crisis concerns triggered the euro sell-off. As the U.S. celebrates Labor Day, local markets remained closed this Monday.
At the time of writing, the shared currency trades at the 0.9925 area, 0.23% below its Friday’s close, after bottoming at a fresh cycle low of 0.9878.
The energy crisis fears in Europe were exacerbated last Friday after the announcements that Russian giant Gazprom halted all natural-gas flows to Europe after finding faults in Nord Stream 1 pipeline. It was later reported that Moscow’s decision to cut energy to Europe would continue until the EU lift sanctions imposed on the back of the Ukraine invasion. This decision may worsen the energetic outlook for the Old Continent as the cold winter months approach.
On the other hand, S&P Global published its final revisions of the EU PMI for August. The German and the EU Composite PMIs were downwardly revised to 46.9 and 48.9 respectively, with the latter falling to its lowest level in 18 months. Other data suggested that the EU Sentix Investor Confidence plunged to -31.8 in September while July Retail Sales advanced 0.3% but are down 0.9% in the yearly reading.
Ahead of the ECB meeting on Thursday, market participants are currently pricing 65% odds of a 75 bps rate hike.
The short term technical outlook for the EUR/USD pair remains clearly bearish according to the daily chart as indicators suggest that the bears are gathering momentum after a slight deceleration in the last couple of days.
The RSI holds a negative slope below its midline, while the MACD printed a higher red bar, indicating growing selling interest.
On the downside, the fresh cycle low of 0.9878 is the next support level, followed by the 0.9800 and 0.9700 psychological levels and then the 0.9660 zone, where the lower end of a descending channel drawn from the February high stands. On the other hand, resistance levels are seen at parity, followed by the 20-day SMA at 1.0070 and the 1.0100 psychological mark.
At the time of writing, the shared currency trades at the 0.9925 area, 0.23% below its Friday’s close, after bottoming at a fresh cycle low of 0.9878.
The energy crisis fears in Europe were exacerbated last Friday after the announcements that Russian giant Gazprom halted all natural-gas flows to Europe after finding faults in Nord Stream 1 pipeline. It was later reported that Moscow’s decision to cut energy to Europe would continue until the EU lift sanctions imposed on the back of the Ukraine invasion. This decision may worsen the energetic outlook for the Old Continent as the cold winter months approach.
On the other hand, S&P Global published its final revisions of the EU PMI for August. The German and the EU Composite PMIs were downwardly revised to 46.9 and 48.9 respectively, with the latter falling to its lowest level in 18 months. Other data suggested that the EU Sentix Investor Confidence plunged to -31.8 in September while July Retail Sales advanced 0.3% but are down 0.9% in the yearly reading.
Ahead of the ECB meeting on Thursday, market participants are currently pricing 65% odds of a 75 bps rate hike.
The short term technical outlook for the EUR/USD pair remains clearly bearish according to the daily chart as indicators suggest that the bears are gathering momentum after a slight deceleration in the last couple of days.
The RSI holds a negative slope below its midline, while the MACD printed a higher red bar, indicating growing selling interest.
On the downside, the fresh cycle low of 0.9878 is the next support level, followed by the 0.9800 and 0.9700 psychological levels and then the 0.9660 zone, where the lower end of a descending channel drawn from the February high stands. On the other hand, resistance levels are seen at parity, followed by the 20-day SMA at 1.0070 and the 1.0100 psychological mark.
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