EUR/USD On Defensive After U.S. And EU Economic Data

The EUR/USD pair retreated for the second day in a row on Wednesday as the euro struggles to find demand after disappointing economic data. Also, despite U.S. House Speaker Nancy Pelosi finally leaving Taiwan to resume her Asian tour, tensions between the U.S. and China linger, inciting a more risk-averse market environment.
 
At the time of writing, EUR/USD is trading at around 1.0150, little changed on the day after hitting a daily low of 1.0122.
 
On the data front, the EU S&P Global Services and Composite PMIs were upwardly revised, but business output contraction was confirmed as the Composite PMI reading stood at 49.9. In addition, EU retail sales fell 1.2% MoM in June and 3.7% YoY, missing market consensus and fuelling the euro’s sell-off.
 
Across the pond, the US S&P Global Services and Composite PMIs were upwardly revised but remained in contraction territory. However, the greenback gained traction after the ISM services PMI came in at 56.7, above the market consensus of 53.5 and pointing to expansion in the sector. In that sense, the U.S. dollar measured by the DXY index advanced to 106.82 before easing.

 
According to the daily chart, the short-term technical outlook for EUR/USD continues to worsen, as indicators suggest a deceleration of the bullish momentum gathered in the last few days.
 
The RSI has turned south and crossed below its 14-day SMA, while the MACD printed a lower green bar, suggesting decreasing buying interest.
 
On the downside, the next support levels are seen at 1.0100, followed by 1.0000 and then the cycle low of 0.9952. On the other hand, EUR/USD needs to close above the 20-day SMA, currently at 1.0155, to ease the immediate pressure. In that case, the following resistances are seen at Tuesday’s peak of 1.0294 and then the 1.0350 level.