The EUR/USD pair plummeted on Tuesday and hit its lowest level in 20 years as the greenback soared across the board on a bout of risk aversion. Concerns remain the same. Stagflation fears are haunting investors that continue to seek shelter in the US dollar.
The EUR/USD broke through May's low at 1.0349 and the 1.0300 psychological level to hit its lowest level since 2002 at 1.0235. At the time of writing, the pair is trading around 1.0265, recording a 1.5% daily loss.
Weighing on the euro, S&P GlobaI) published the final readings of the EU Services and Composite PMIs for June, which showed growth slowed to a 16-month low.
Against the risk-off backdrop, Treasuries rallied, and yields tumbled. The United States 10-Year bond yields dropped to 2.82%, while the United States 30-Year yields fell to near 3%. US stock indexes fell sharply but trimmed losses by the closing bell, with the NASDAQ and the S&P 500 cutting into the green.
From a technical perspective, the EUR/USD pair holds a clear short-term bearish bias according to the daily chart, with the price near multi-year lows and indicators in negative territory. The RSI gained a negative slope while the MACD prints higher red bars, indicating strong bearish momentum.
The immediate support is seen at 1.0200. Loss of this level could send the shared currency to its lowest levels since the euro entered circulation, and parity should not be ruled out.
On the other hand, the next resistance is seen at the 1.0300 area, followed by the former cycle low of 1.0349 and the 1.0400 psychological level. Still, the bearish tone would prevail below a descending trendline drawn from 2022 highs, currently around 1.0600.