EUR/USD slumps to 5-day lows near 1.1160 pressured by risk-aversion
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EUR/USD slumps to 5-day lows near 1.1160 pressured by risk-aversion

  • US Dollar Index climbs higher toward 98 on Tuesday.
  • 10-year US T-bond yield drops to 20-month lows.
  • Consumer sentiment improves both in the U.S. and the eurozone.

The EUR/USD pair extended its slide into a second day on Tuesday as the greenback continues to outperform its risk-sensitive rivals such as the shared currency. After dropping to its lowest level in five days at 1.1162, the pair retraced a small portion of its daily fall and was last seen trading at 1.1170, erasing 0.23% on a daily basis.

The ongoing trade conflict between the U.S. and China, the uncertainty surrounding the UK politics,  Brexit, and the potential implications of the European parliamentary elections continue to keep investors away from risky assets and ramps up the demand for traditional safe-havens. Reflecting this market sentiment, the 10-year US Treasury Bond yield dropped to its lowest level since September of 2017 while the 10-year German bond yield slumped to its worst level since August of 2016.

Earlier today, the European Commission’s latest Business & Consumer Sentiment Survey showed that the Consumer Confidence Index improved slightly to -6.5 in May from -7.3 in April to match the market expectation. Further details of the publication revealed that the Industrial Confidence Index rose to -2.9 from -4.3 and the Business Climate Index worsened to 0.3 from 0.42.  

In the second half of the day, the mixed data from the U.S. caused fluctuations in the US Dollar Index but the risk-off atmosphere allowed it to climb higher toward the critical 98 mark. As of writing, the DXY was up 0.18% on the day at 97.91. The Conference Board’s Consumer Confidence Index jumped to 134.1 in May to surpass the analysts’ estimate of 130 but the Dallas Fed Manufacturing Index slumped to -5.3 in May from 2in April.  

The Destatis will publish labour market data from Germany on Wednesday. Later, the U.S. docket will not be featuring any significant data releases and markets will be paying close attention to T-bond yields.

Technical outlook

The Relative Strength Index (RSI) on the daily chart is now pushing lower toward  the 30 mark, suggesting that sellers remain in control of the pair’s price action. Additionally, the pair now remains on track to close the day below both the 20-DMA and the 50-DMA to confirm the bearish outlook.  


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