After updating its 20-year lows, EURUSD remains under pressure.
The major currency pair is looking weak on Tuesday. The current quote for the instrument is 0.9906.
So, the Euro is cheaper than the “greenback”. We’ve already seen it this year, but the asset never traded so low – yesterday it tested 0.9930. Obviously, investors have reasons for such reactions and, frankly speaking, they are more than one or two.
For example, the US bond yield rally. Investors tend to lean toward this instrument as opposed to all other assets. The Euro is failing due to the escalating energy crisis in Europe. The closer the season of autumn and winter, the higher the risks of energy and gas shortages – market players have to take all this into account. So far, there is no clear understanding of how long this problematic situation with energy supply might continue and what the upcoming winter is going to be like – whether it will require more gas than planned or not. All these questions have no answers, and it puts pressure on the Euro.
The gas price surge deprives the European Central Bank of the opportunities to fight inflation effectively. The regulator can’t tighten its monetary policy as fast as it would like when commodity prices are rallying. It’s another negative vibe for the Euro.
Later in the afternoon, investors should pay attention to preliminary reports on the Manufacturing/Services PMIs from both the US and Europe. In addition, the Euro Area is scheduled to release the Consumer Confidence report for August. All numbers are expected to drop a little bit.
Source: Roboforex
