EUR/USD Faces Selling Pressure as Eurozone Economic Concerns Mount

The EUR/USD pair encountered strong resistance around 1.0700 during the early European session, leading to selling interest. The pair is currently defending the crucial support level of 1.0670, and a breakdown below this level could trigger a broader bearish movement. The Euro has been under pressure as investors anticipate a gloomy economic outlook in the Eurozone.

US equities closed positively on Tuesday, supported by more dovish catalysts impacting the Federal Reserve’s interest rate policy. The US Dollar Index (DXY) has rebounded to around 104.18, although it remains in uncertain territory due to the lack of significant economic events this week.

The demand for US government bonds has increased as the likelihood of a stable interest rate policy rises. According to the CME FedWatch tool, there is over an 80% chance of rates remaining unchanged. This has led to a decline in 10-year US Treasury yields to approximately 3.66%.

The German economy is facing challenges, primarily due to the European Central Bank’s higher interest rates. Germany has already experienced a recession with consecutive quarterly contractions in Gross Domestic Product (GDP). Additionally, German Factory orders are consistently declining, indicating weak demand.

Eurozone Retail Sales data released on Tuesday fell short of expectations. Monthly Retail Sales remained stagnant, while the market anticipated a 0.2% expansion. Annual Retail Sales contracted by 2.6% compared to the projected -1.8%. Despite the challenging economic outlook, ECB President Christine Lagarde is likely to continue raising interest rates, driven by persistent core inflation.

ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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