July 6, 2022 05:27 AM ET
By: AnalysisWatch
Selling trends around the single currency continue unabated and are now dragging EUR/USD to fresh lows near 1.0230, a range last seen in December 2002.
The EUR/USD fell under increasing downward pressure for the fourth consecutive session on Wednesday amid unabated market talk of a likely recession in the euro area and the US in the coming months.
Moreover, uncertainty about the ECB's de-fragmentation tool remains high, as the central bank has not yet given markets any concrete indications beyond wishful thinking by policymakers.
Another drop in 10-year German Bund yields coincides with the daily decline in the cash market, this time to a multi-week low of 1.15%.
In Germany, factory orders rose 0.1% month-on-month in May, and the construction PMI improved slightly to 45.9 from 45.4 in June. In Europe as a whole, retail sales rose 0.2% in the year to May.
Across the ocean, ISM Non-Manufacturing will be in the spotlight later in the NA session, followed by the release of the FOMC minutes from the June 15 meeting.
The bears are keeping the EUR/USD under heavy pressure and the acceleration of the downtrend opens the door for a likely visit to the 1.0200 area sooner rather than later.
The pair's price action remains subdued, following increasing speculation of a likely recession in the region, dollar dynamics, geopolitical concerns, fragmentation fears, and divergence between the Fed and the ECB.
So far, the spot has retreated 0.30% to 1.0234 and faces next support at 1.0225 (2022 low of July 6), followed by 1.0200 (round value) and finally 1.0060 (low of December 11, 2002). On the other hand, a break above 1.0563 (55-day SMA) would target 1.0615 (weekly high of June 27) en route to 1.0773 (monthly high of June 9).