- EUR/USD looks south towards 0.9900 as US dollar bulls refuse to give.
- Rebounding yields, risk-aversion support the USD amid hawkish Powell.
- Friday’s close below 0.9965 support on the 4H chart suggests more pain for the pair
EUR/USD is nursing losses below 0.9950 in Asia on Monday, extending the previous decline amid unrelenting US dollar demand across the board.
Hawkish Fed Chair Jerome Powell combined with rising expectations of a super-sized Fed rate hike in September have unnerved investors and triggered a wave of risk-aversion. The flight to safety has helped put a fresh bid under the greenback.
Further, the rebound in the US Treasury yields amid the revival of hopes for aggressive Fed tightening has also collaborated with the renewed buying around the dollar, as EUR/USD remains vulnerable under parity.
The shared currency fails to find any comfort in the ECB-speak even though a couple of the central bank’s policymakers favor a big rate hike next month. However, concerns over the inflationary impact of the EUR depreciation by the ECB officials keep the domestic currency undermined. The bleak euro area economic outlook amid the deepening gas crisis also continues to weigh down on the euro.
With a data-empty EU docket ahead, attention turns towards the speech from the Fed official Lael Brainard and the sentiment on global stocks for fresh trading opportunities in the pair.
Looking at EUR/USD’s four-hour chart, the latest uptick seems like a breather for sellers, which will be seen as a good selling opportunity ahead.
The bearish bias remains intact in the near term, supported by the dowsnide break of the upward-sloping trendline support at 0.9966 late Friday.
All eyes now remain on a break of the 0.9900 level, as the 14-day Relative Strength Index (RSI) remains bearish while sitting just above the oversold territory.
EUR/USD: Four-hour chart
On the flip side, the confluence of the rising trendline resistance now support and the mildly bearish 21-Simple Moving Average (Sma) at 0.9970 will be the level to beat for bulls.
A sustained recovery above the latter will be ensured, as buyers look to recapture the downward-pointing 50 SMA at 1.0018 thereafter.
