The EURUSD pair continues to struggle, trading near 1.1638 after hitting a weekly low close to 1.1620 earlier in Wednesday’s European session. The risk-off market tone has lifted the US Dollar (USD), leaving the Euro under pressure as investors adopt a cautious stance ahead of the FOMC Minutes release and Jackson Hole symposium later this week.
Risk Aversion Boosts USD Safe-Haven Appeal
Global markets are firmly in risk-off mode. Wall Street’s sell-off, particularly in the tech sector, and concerns about government interventionism have dampened investor confidence. Asian markets followed suit, and European indices are expected to open in the red. In such conditions, the USD thrives as a safe-haven currency, further weighing on EURUSD performance.
Market Sentiment Points to Further USD Strength
Global market sentiment remains firmly risk-averse, creating a supportive environment for the US Dollar. The sharp sell-off in US tech stocks, compounded by concerns over increased government regulation, has triggered a broader wave of caution across markets. This has cascaded into Asian and European trading sessions, where equities are under pressure and bond yields are adjusting to safe-haven flows.
The Dollar, as the world’s primary safe-haven currency, naturally benefits in such environments. On the other hand, the Euro has struggled to attract buyers due to tepid economic data, such as weak German PPI and steady Eurozone CPI, which point to a slowing regional economy.
Unless there’s a meaningful shift in sentiment such as a breakthrough in the Russia-Ukraine peace talks, an unexpected rebound in European data, or a dovish surprise from the Fed the USD is likely to maintain its strength. This dynamic keeps the EURUSD pair vulnerable to further declines, with the 1.1600 level emerging as a critical point of support in the near term
Eurozone Data Fails to Provide Support
The final Eurozone CPI report for July confirmed inflation holding steady at 2% year-on-year, while core inflation eased 0.2% on the month but grew 2.3% annually. Despite meeting expectations, the data failed to support the Euro.
Additionally, Germany’s Producer Price Index (PPI) contracted 0.1% month-on-month and 1.5% year-on-year, signaling weakening demand and adding to the bearish tone for the common currency.
Geopolitical Uncertainty Adds to Bearish Tone
Hopes of progress in the Russia-Ukraine peace talks were dampened after the Kremlin cooled optimism following a Trump-Zelenskyy meeting. While Moscow proposed hosting further discussions, Ukrainian President Zelenskyy rejected the idea, leaving the situation uncertain. This geopolitical unease is another factor driving demand for the USD over the Euro.
Market Focus on FOMC Minutes and Jackson Hole
The next key trigger for EURUSD traders will be the FOMC Minutes, scheduled for release later Wednesday. However, the market impact could be limited since the meeting occurred before key labor and inflation data that have since shifted expectations toward a potential Fed rate cut in September.
Investors will also be closely watching Fed Chair Jerome Powell’s speech at Jackson Hole on Friday for updated signals on the Fed’s policy trajectory.
Technical Outlook
Support levels: 1.1620 (weekly low), followed by 1.1580.
Resistance levels: 1.1665, then 1.1700 psychological barrier.
The bearish momentum remains dominant as long as EURUSD trades below 1.1700, with risk skewed toward further downside.
Conclusion
The EURUSD pair remains under heavy bearish pressure, driven by a combination of risk aversion, steady Eurozone inflation, weaker German producer data, and persistent geopolitical uncertainty. While the upcoming FOMC Minutes may offer some insight, the real market-moving event will likely be Jerome Powell’s address at the Jackson Hole symposium, where traders hope to gain clearer signals on the Fed’s next policy steps. Unless the Euro finds fresh catalysts or the USD weakens meaningfully, the pair is likely to remain subdued, with risks tilted toward a retest of the 1.1600 level in the near term.
