With the USD seeing a fresh wave of demand, EURUSD has fallen to its lowest level in over 20 years with the pair now back under parity for the second time this year. Soaring inflation in the eurozone, made worse by the relentless rise in gas prices, is threatening to send the eurozone into recession this year. While the block was seen narrowly avoiding negative growth in Q2, an imminent recession in Germany and the elevated risk of continued energy price hikes throughout the end of the year means that traders fear the worst for the single market. Meanwhile, with the Fed reaffirming its commitment to pushing ahead with policy tightening, EURUSD is under heavy pressure and looks likely to remain so for some time.
The pair has now fallen to fresh lows on the year, hitting its weakest price in over 20 years. With the market continuing to push lower within the bear channel which has framed the recent sell-off, the focus is on a break below the .9885 level support and a test of the channel low and deeper support at the .9715 level. Momentum studies are bearish here, supporting a deeper push lower and only a move back above the 1.0214 level will alleviate near term bearishness.