- Germany ZEW Economic Sentiment declined in the current August 2021 survey, dropping 22.9 points.
- US dollar index reached 92.99 level, amid hawkish Fed remarks and stronger than expected NFP figures.
- Forex trading market participants may look for sell trades below the $ 1.1755 level today.
On Tuesday, the EUR/USD pair is trading with a strong bearish bias at the 1.1720 level. The pair has violated the support level of 1.1760, and the bearish trend continues to dominate below this. The EUR/USD continued its bearish streak for the 8th consecutive session on Tuesday as the German ZEW economic sentiment disappoints. The pair dropped to its lowest since the ending week of March amid the strength in the US dollar.
If you are interested in trading EUR/USD with forex robots, check out our guide.
German ZEW Economic Sentiment Triggers a Sell-off in EUR/USD
Most of the selling trend in the EUR/USD is triggered due to weaker than expected economic releases. For instance, the Zentrum fur Europaische Wirtschaftsforschung (ZEW) has released economic seneitment data. The figures came out as 42.7 versus the economists’ forecast of 55.3.
Germany ZEW Economic Sentiment declined in the current August 2021 survey, dropping 22.9 points to a fresh version of 40.4 points versus July. That’s the third time since May that the economic sentiment has fallen, this time even moderately stronger compared to the previous month. However, the German economic situation assessment has improved in August and stands at 29.3 points, 7.4 points higher than July. Weaker than expected data has triggered a sell-off in the EUR/USD currency pair.
Stronger Dollar Keep Dragging EUR/USD Lower to 1.1720
The US dollar index reached 92.99, amid hawkish Fed remarks and stronger than expected NFP figures released last week. In the previous trading hours, the US Treasury Yields on benchmark 10-year note jumped to their highest since July 16 at 1.319%. It added strength to the US dollar index.
The blend of higher yields and soaring DXY, and the better-than-expected jobs figure pushed the US dollar towards 93 levels. That negatively impacted EUR/USD pair and keep the bulls on the backfoot.
On the other hand, Tom Barkin commented about two goals set for the threshold of starting tapering of asset purchases and increasing the interest rates. One of the above goals has already been achieved, and that’s 2% inflation. However, full employment is yet to be achieved, and it’s showing improvement. Consequently, traders depicted economic growth and rate hike sooner than expected, which kept the US dollar higher and EUR/USD bearish.
ECB policymaker Jens Weidmann Supports Monetary Policy Tightening
Lastly, the ECB policymaker Jens Weidmann said that the European Central Bank must tighten monetary policy to counter inflationary pressures. European countries have increased their borrowing to cope with the coronavirus pandemic. That has resulted in exposing them to increased debt servicing costs.
Weidmann said that ECB would have to act in line with the price stability objective to make the outlook of inflation sustainable. These comments from ECB policymakers added further weakness in single currency Euro that dragged EUR/USD pair further on the downside.
EUR/USD – Daily Technical Levels
Support Resistance
1.1725 1.1760
1.1712 1.1782
1.1690 1.1794
Pivot Point: 1.1747
EUR/USD Bearish Amid Weaker German ZEW Economic Sentiment
EUR/USD price prediction is strongly bearish below the $1.1759 level amid weaker than expected German ZEW economic sentiment data. On the 4-hour chart, the pair has violated the triple bottom support level of 1.1760 level. The closing of candles below this level is confirming a breakout. Now the pair has the potential to trigger selling until the next support level of 1.1706 level.
The 50 days EMA (Exponential Moving Average – Red Line) holds at 1.1780 level, while the CMP stays at 1.1726. At the same time, the oscillator indicator Stochastic RSI is holding in a sell zone, below 50 at 12. Both of the indicators are suggesting a solid selling bias amount investors.
Therefore, Forex trading market participants may look for sell trades below the $ 1.1755 level today. The initial targets are likely to be $ 1.1706 and $ 1.1680 levels. Alternatively, buy trades can be taken above the $ 1.1680 level to target $ 1.1760. All the best!
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