- The bullish momentum surrounding the US Dollar Index persists in the late NA session.
- The EUR/USD pair could target the critical 1.15 in the coming days.
- Sentiment data from the euro area are likely to be the next catalyst.
After breaking below the 1.16 mark in the early NA session, the EUR/SD pair couldn’t find an opportunity for a recovery and extended its losses. As of writing, the pair was trading at 1.1553, losing 95 pips, or 0.82%, on the day.
The broad-based bullish tone surrounding the greenback on Wednesday seems to be the main catalyst behind the pair’s price action. The US Dollar Index, which had been sold-off on trade war concerns since the second half of last week, finally gained traction today after comments from administration officials suggested that President Donald Trump was backpedaling regarding the foreign investment restrictions in American tech companies and harsh tariffs on Chinese imports.
Furthermore, today’s trade balance data from the U.S. showed a lower-than-expected deficit in May and provided an additional boost to the buck. At the moment, the DXY is testing the 95 mark for the first time since June 21.
On Thursday, the European Commission is going to publish a set of sentiment data including business climate, industrial, consumer, and sentiment confidence indexes. Considering the dismal outlook seen in the latest IFO and ZEW surveys and the shared currency’s negative reaction to them, disappointing figures in tomorrow’s reading could weigh on the pair.
Technical outlook
“The pair is at its daily lows ahead of the Asian opening and clearly bearish according to readings in the 4 hours chart, now developing well below all of its moving averages and technical indicators heading sharply lower within negative territory,” notes Valeria Bednarik, Chief Analyst at FXStreet.
“As long as the pair remains now below the 1.1620 level, the risk will remain leaned to the downside, with a break below 1.5550, now the immediate support, exposing the 1.1500 region, where the pair bottomed twice this year. Beyond this last, the bearish momentum is set to continue mid-term, with the first possible downward target being the 1.1440/60 price zone.”
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