The EUR/USD's tumble continues, with the currency pair hitting a new low at 1.0556 in the early hours of Wednesday, the lowest since mid-March.
The single currency has indeed suffered since the start of the week from dovish comments from some members of the ECB, who estimated that the central bank will have to maintain rates at their current level for a certain time, thus reducing the probability of 'a new rate increase before the end of the year.
The EUR/USD also suffered from a very clear rebound in the Dollar, which benefits from its status as a safe haven against the risk aversion which has dominated the world markets since the start of the week.
We will indeed recall that the world stock markets fell sharply on Tuesday, the Nasdaq technology stock index having notably lost 1.57% in closing.
US rates also benefited, which also strengthened the greenback, while the 10-year rate reached a 16-year high at 4.55%.
Regarding the day this Wednesday, the main event likely to influence the price of the EUR/USD pair will be the publication of US durable goods orders.
However, it will not be until Friday that the most important indicator of the week, namely the Core PCE household spending index, will be published. This is indeed the Fed's preferred inflation measure, and the data could help clarify currently unclear expectations for the Fed's next meetings.
Indeed, the rate barometer of the Fed Investing.com shows that the market is pricing in a nearly 40% chance that the Fed will raise rates at least once more before the end of the year.
PCE data above expectations on Friday could tip the balance in favor of more rate hikes, and therefore support the dollar, while data below consensus could penalize the greenback, to the benefit of EUR/USD.
Technical thresholds to watch on EUR/USD
From a graphical point of view, we note that the recent new losses of the EUR/USD have further reinforced the bearish bias materialized by a descending channel that stretches from the July peak.
At this point, the next potential supports for the Euro Dollar are the March 15 low at 1.0515, the psychological threshold of 1.05, and this year's low marked on January 4 at 1.0480.
Finally, in the event of a rebound in the currency pair, the threshold of 1.06, the old support of 1.0635 and 1.07 will be the first resistances to watch.
losses accumulate on EUR/USD while risk aversion boosts the Dollar