EUR/USD tumbled more than 1.5% on Tuesday through major support at 1.0335/50, striking a 21-1/2-year low and facing a potential slump below parity as central bank policies, growth concerns and technicals weigh heavily.
Painting a grim global economic backdrop, new COVID-19 testing in China nL1N2YM0N4threatens lockdowns and global supply chain problemswhile European gas prices rose again due to supply concerns from Russia and Norway nL8N2YM1VZ.
The ECB is set to hike rates to fight inflation, just as economic growth may be slowing nL8N2YI2RG, with investors likely to expect tightening and China lockdowns to hobble global growth, which the euro zone is highly dependent on.
The break of the 1.0335/50 support zone was a major technical impediment that EUR/USD bears overcame after consolidation that began in May resolved with new lows.
Daily and monthly RSIs are falling and are oversold or near oversold but are not diverging, which suggests downside momentum remains.
EUR/USD shorts now have their sights set on the psychological 1.0000 level but may be looking at bigger support near 0.9600 where the August 2002 low and January 2001 high sit.
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