July 26, 2022 18:53:24
The EURO renews its weakness against the greenback. The recent relief rally took a U-turn after the buyers failed to sustain the gains beyond the 1.0250-1.0280 zone. The lack of fundamental triggers and recovery in the US dollar exerts pressure on the shared currency.
In the recent development, Russia’s Gazprom said it would further squeeze the gas supply through the Nord Stream pipeline due to maintenance, delivering only 20% of its capacity. The Eurozone is already struggling with the natural gas shortage amid the ongoing energy crisis.
On the economic front, the data is not encouraging for the EURO buyers. Recent Composite PMI pointed at a contraction in the private sector in July. The largest economy on the continent, Germany’s IFO business climate is on the cusp of a recession.
Meanwhile, the IMF lowered its growth prospects for the global economy to 3.2% in 2022 from 3.6% in April. Investors run for safety and rush to buy the greenback amid the global recession and inflationary concerns,
The US dollar index (DXY) shrugs off the days of consolidation and posted the largest single-day gain since July 11. The index touched the high of 107.28 on Tuesday.
The market is bracing up for a key Fed rate decision, the central bank is on its way to raising interest rates by another 75 basis points on Wednesday. The risk-off mood added to the attractiveness of the dollar.
EUR/USD test one week low
On the 4-hour chart, the EUR/USD pair trades below the critical 50-day EMA at 1.0186 on Monday.
After recovering from the lows of 1.0047 made on July 14, it seems the price found its near-term bottom. As the pair booked in a gain of nearly 250 pip. It made swing highs of 1.0274.
However, the price enters into a phase of consolidation as the relief rally losses its steam. An asymmetrical triangle breaks out on the lower side. This makes bears hopeful for another leg-down.
A break below the session low of 1.0107 would accelerate the selling toward the $1.0000 mark.
On the contrary, the emergence of fresh buying pressure could move back to the 1.0185 level, which coincides with the 50-day moving average.
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