EUR/USD Poised To Extend Its Decline Below The 1.1800 Threshold

EUR/USD Current Price: 1.1823

• The German ZEW survey surprised with sharp contractions in Economic Sentiment.
• The US ISM Services PMI contracted to 60.1 in June, missing the expected 63.5.
• EUR/USD poised to extend its decline below the 1.1800 threshold.

Risk aversion took over financial markets with the US return. The greenback appreciated against most major rivals, with the EUR/USD pair plunging to 1.1806 after flirting with the 1.1900 area earlier in the day. The shared currency was hit by poor German data, as the country published May Factory Orders, which rose by 54.3% YoY and fell 3.7% MoM. The ZEW survey showed that the Economic Sentiment contracted to 63.3 in July, much worse than anticipated. The sentiment in the EU was also down, to 61.2. On a positive note, May Retail Sales in the EU rose 4.6% MoM and 9% YoY, beating expectations.

The US published the ISM Services PMI, which resulted at 60.1 in June, missing the 63.5 expected. Markit published the final Services PMI for the same month, which was downwardly revised to 64.6 from 64.8. The poor figures added to the dismal mood, fueling demand for the safe-haven dollar. On Wednesday, Germany will release May Industrial Production, but the focus will be on the FOMC Meeting Minutes. Policymakers surprised investors with their hawkish stance on their June meeting, and the document could provide details on upcoming tapering.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair trades around 1.1820, heading into the Asian opening, maintaining a bearish stance in the near-term. The 4-hour chart shows that the pair is currently developing below all of its moving averages, which head lower with different degrees of bearish strength. The Momentum indicator heads firmly lower within negative levels, while the RSI consolidates around 37 without signs of bearish exhaustion. A steeper decline could be expected on a break below the 1.1800 figure.

Support levels:  1.1795 1.1750 1.1710

Resistance levels: 1.1875 1.1920 1.1980

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