EUR/USD maintains its bearish tone on Tuesday, seeing its decline accelerate to the 1.0760 area as the dollar continues to face upward pressure, while unease over the US debt ceiling continues to weigh on sentiment.

Meanwhile, talks over the US debt ceiling are expected to continue to drive sentiment in global markets in the near term, while speculation of further rate hikes by the ECB at its June and July meetings, and likely in September, continues to grow.

The EUR/USD pair trades near its daily low as the US Dollar advances against most major rivals. Technical readings in the daily chart favor a bearish extension. The pair is meeting sellers around a directionless 100 Simple Moving Average (SMA) for a third consecutive day, while the 20 SMA gains downward traction above it. At the same time, the Momentum indicator heads firmly south within negative levels and at fresh multi-week lows, while the Relative Strength Index (RSI) indicator also heads south at around 37.

The risk skews to the downside in the near term. The 4-hour chart shows EUR/USD finally fell below a bearish 20 SMA after seesawing around the level for two consecutive days. At the same time, the 100 SMA extends its slide below the 200 SMA, both over 100 pips above the current level. Finally, the Momentum indicator rotated south but stands within neutral levels, although the RSI heads lower almost vertically at around 36.

The pair has an immediate support level at 1.0745, the 61.8% retracement of the 2022 yearly decline. Large stops likely accumulate below the level and once triggered, the US Dollar can accelerate its advance. On the other hand, sellers will probably add on approaches to the 1.0800 threshold.

EURUSD has still hidden bearish cards on the line

May 23 2023