Euro Breaking News: EUR/USD Slips on Poor EU ZEW Economic Sentiment Data, Parity at Risk

EUR/USD TALKING POINTS

• ZEW Economic Sentiment Index (JULY) – ACT: 0-53.8

EURO FUNDAMENTAL BACKDROP

The euro’s initial reaction to the ZEW economic sentiment index misses from both Germany and the eurozone respectively (see economic calendar below) was expectedly negative testing the much talked about parity level. The -53.8 read for the EU region was the lowest print since November 2011 thus reiterating the fading level of optimism withing the eurozone. I believe the 1.0000 psychological support zone will not hold and is likely to be penetrated in the short-term. Risks facing further euro weakness include the potential energy crisis, an increasingly hawkish Fed and recessionary fears backing havens like the U.S. dollar. Looking ahead, U.S. inflation will be the focus tomorrow with markets looking for further guidance around the U.S. economy.

EUR/USD ECONOMIC CALENDAR

Source: DailyFX economic calendar

TECHNICAL ANALYSIS

EUR/USD DAILY CHART

Chart prepared by Warren Venketas, IG

Resistance levels:

Support levels:

IG CLIENT SENTIMENT DATA: BEARISH

IGCS shows retail traders are currently LONG on EUR/USD, with 74% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term downside bias.

Contact and follow Warren on Twitter: @WVenketas