The EUR/USD pair extended its free-fall on Tuesday and hit the parity level for the first time since 2002 during the European session as Eurozone and Germany's ZEW surveys came in worse than expected. However, the shared currency managed to recover some ground and at the time of writing, the EUR/USD pair trades around 1.0060 with a modest 0.3% daily gain.
ZEW published July’s economic sentiment survey of the Eurozone, which fell to -51.1 from June’s -28 and missed the market consensus of -32.8. The last time the economic sentiment was this low in Europe was at the depths of the euro crisis by the end of 2011. Additionally, Germany’s ZEW survey showed poor results and fell to -53.8, and its current situation survey fell to -45.8, indicating widespread economic pessimism across the Eurozone.
Meanwhile, the yield on the United States 10-Year note fell further to 2.899%, indicating a downbeat economic outlook amongst wary investors running for the hills. The U.S. dollar, measured by the DXY, posts a modest daily loss but holds near the 108.00 level after hitting a 20-year high of 108.56.
Investors’ focus now turns to the U.S. Consumer Price Index for June, which will be published on Wednesday and is expected to show a new four-decade high of 8.8%.
From a technical perspective, the EUR/USD holds a very clear short-term bearish bias according to the daily chart, with the price posting lower lows for the sixth day in a row and indicators well into the red. The RSI hasn’t corrected oversold readings yet, although it is showing a positive slope, while the MACD continues to print higher red bars indicating strong selling pressure.
The current bounce could extend over the next sessions, with 1.0100 and 1.0200 as the next resistance levels. A break above the latter could pave the way for a steeper correction toward the 20-day SMA, currently around 1.0395. On the other hand, support levels are seen at the parity level of 1.0000, followed by the 0.9960 area.