EUR/USD Retreats on Flight to Safety, Tests Key Support Levels
EUR/USD erased earlier gains on Tuesday, retreating from an overnight high of 1.04583 to hit a six-session low of 1.0372 as risk sentiment soured. Safe-haven flows into the U.S. dollar and Japan’s yen dominated trading as U.S. Treasury yields dropped and equity markets declined, reflecting a broad flight to safety. A rally in USD/CNH and weakness in EUR/JPY, which fell toward 162.85, added further pressure on EUR/USD. The pair recovered modestly late in the session but remained down -0.35%, with technical signals pointing to further downside risks.
Technically, EUR/USD remains under bearish pressure. The pair is holding below its 5- and 21-day moving averages, with falling RSI levels indicating weakening momentum. Support lies at the six-session low of 1.0372, with further downside targets at 1.0330 and 1.0300. Resistance is seen at 1.0458, the overnight high, followed by the 21-DMA near 1.0480. A failure to reclaim these resistance levels could leave EUR/USD vulnerable to additional declines, particularly if risk sentiment continues to favor safe-haven assets.
Looking ahead, China’s December NBS manufacturing and non-manufacturing PMIs will be closely watched, as they could influence global risk sentiment. A stronger-than-expected print may help stabilize markets and provide some support to EUR/USD, while disappointing data could exacerbate safe-haven flows, pressuring the pair further. For now, the bearish bias remains intact, with the broader trend dictated by risk appetite and technical levels.