After briefly trading near highs not seen since the end of June yesterday, EUR/USD has turned lower to fall back below the 1.1300 level.
The pair has been weighed by the latest forecasts published by the European commission that show much less optimism over the economic recovery compared to its Spring Forecast.
GDP is now expected to contract by 8.3% this year before growing 5.8% in 2021. This is compared to an earlier forecast that called for a contraction of 7.7% in 2020 and a growth rate of 7.4% next year.
The European Commission said it revised down its projections as the easing of lockdown restrictions is happening at a more gradual pace than earlier expected.
Retail sales in Italy was reported earlier today to jump higher by a seasonally adjusted 24.3% in May after declining 10.7% in April and 21.3% in March. The boost is attributed to the easing of lockdown restrictions and the reopening of stores.
The economic calendar is light for the remainder of the day which could lead to a slowdown in volatility. Equity markets are under pressure which may also impact the currency pair. The S&P 500 was last seen down three-quarters of a percent in pre-market trading, wiping out about half of yesterday’s gain.
EUR/USD is stuck in a range and this behavior may continue in the absence of some form of a catalyst.
To the upside, 1.1338 is seen as resistance as the level has triggered turns on several attempts since June, as seen on a daily chart.
Major support for the pair falls at 1.1212, and while above it, the sideways grind is likely to continue.
The US dollar index (DXY) is seen recovery from recent lows and has wiped out most of yesterday’s gain. Bulls might be encouraged if the index is able to close the day near current levels.
- EUR/USD has fallen lower after the European Commission cut its economic projections.
- Range conditions continue for EUR/USD as the pair has held in a range between 1.1200 and 1.1350 since early June.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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