EUR/USD Faces Pressure Amid Bearish Signals; Key U.S. Data in Focus
Market Sentiment and Key Influencers
EUR/USD faces a challenging landscape, with supportive data necessary to counteract the bearish technical signals. On Tuesday, the pair erased earlier gains, dipping below the 10-day moving average (10-DMA). This move suggests the potential for a deeper decline unless forthcoming U.S. data alters the current momentum. Federal Reserve Governor Michelle Bowman’s recent comments, indicating no expected rate cuts in 2024 and openness to further rate hikes, have influenced market sentiment.
Investors are particularly focused on the weekly jobless claims and May Personal Consumption Expenditures (PCE) reports. A reduction in jobless claims coupled with a rise in PCE could bolster U.S. yields and the dollar, thereby widening its yield advantage over the euro. Such a scenario would likely reinforce bearish technical signals, pushing EUR/USD lower towards the 1.0550/1.0600 range, completing the pattern seen from June 4 to June 14. The pair currently trades below several daily moving averages and the daily Ichimoku cloud, with declining monthly and daily Relative Strength Indexes (RSIs), all of which underscore the bearish outlook. Additionally, uncertainty surrounding the upcoming French elections further weighs on EUR/USD, adding to the downside risks. Bulls will require notably weak U.S. data to fuel any substantial rally.
Session Overview and Technical Indicators
During the New York session, EUR/USD opened near 1.0726, following an overnight high of 1.0742. The downward trend persisted, driven by robust U.S. yields that have spurred demand for the dollar, pushing USD/CNH above 7.2907. A drop in commodity prices, alongside some equity gains eroding, provided additional support for the U.S. dollar. EUR/USD fell below the 10-day moving average, reaching a low of 1.06904 before a slight rebound. The pair later lifted above 1.0704, down by 0.21% in the New York afternoon. Technical indicators remain bearish, with falling RSIs and the pair consolidating its decline from the June 4 high.
Upcoming Data and Risks
Key risks in Europe include the German July GfK and French June consumer confidence data. In the U.S., the release of May new home sales data is a critical factor to watch for the New York session on Wednesday. Investors will closely monitor these releases as they could significantly impact EUR/USD’s near-term trajectory.
