EUR/USD could extend its fall further after dropping to a 13-session low on Tuesday, but the downward journey may be a grind due to influences from the dollar side of the equation.
Germany's downbeat ZEW nL8N2ZS27V indicated investors were growing more concerned about recession in Europe's largest economy, with elevated energy prices -- which may rise further nL1N2ZS0JT -- reinforcing those worries, all of which could lead the ECB to take a less hawkish stance in September.
But there are also reasons why the Fed might also become less aggressive, which would limit dollar gains.
Downbeat U.S. July housing data nL1N2ZR1EF raises questions about the vigor of U.S. economic growth while inflation data moderated recently, which could allow the Fed become less hawkish.
Technicals still highlight downside risks, with EUR/USD trading below the 10- and 21-day moving averages and daily and monthly RSIs falling.
EUR/USD also recently broke the base of a rising wedge pattern.
Key short-term support sits near 1.0100, a break of which would bring July's low into focus.
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