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EUR/USD hit a 20-year low, EU economy slipped to a 16-month low


US stock rebounded slightly after falling as much as 2.2% on Tuesday as fears of a globalized recession take their toll on financial markets. The talks of easing tariffs on China imposed by the former administration failed to appease recession fears as concerns about a potential US recession and stubborn inflation remained, despite the reducing tariffs on imported Chinese goods could impact consumer prices in the US. The release of the FOMC minutes in today’s session will remain in focus, providing a detailed view of Federal Reserve policymakers on supporting the Fed’s 75 basis points interest rate hike. In the Eurozone, German Economy Minister Robert Habeck noted that the energy industry crisis could hurt financial markets as Russia has curbed its gas flows to the country. Market participants expect the European Central Bank to hike rates by 130 bps by year-end.

The benchmarks, S&P 500 and Nasdaq 100 both rose on Tuesday despite the safe-haven US dollar taking advantage of the risk-aversion and risk-off market mood. S&P 500 was up 0.2% daily and the Nasdaq 100 also advanced with a 1.7% gain for the day. But eight out of eleven sectors stayed in negative territory as the energy and utilities sectors are the worst-performing among all groups, losing 4.01% and 3.43%, respectively. The Dow Jones Industrial Average meanwhile declined with a 0.4% loss on Tuesday and the MSCI World index rose 0.3%. Global equity markets remain under pressure as investors rushed to the dollar’s safety recently.

Main Pairs Movement

The US dollar advanced and surpasses the 106.00 level to touch a new cycle high on Tuesday. The US dollar soared over 1.3% due to the fears of a globalized recession, continuing to find demand amid risk-averse scenarios. According to analysts, the risk of a US recession is above 70%.

EUR/USD was surrounded by bearish momentum, The EUR/USD pair fell to a 20-year low of 1.0236, recovering some ground later in the day but still hovering below the 1.0300 thresholds. Economic reports show that EU growth slowed to a 16-month low, while Germany struggles to get gas amid gradually increasing tensions with Russia. German Economy Minister Robert Habeck said that the energy industry crisis could hurt financial markets. He did not rule out intervening gas prices. Russia curbed its gas supplies to the country, Germany, therefore, fears a complete blackout of provision, as Russia will temporarily shut down the NordStream-1 pipeline on July 11 for annual maintenance. By contrast, the risk-off dollar seems more attractive to the Euro. Meanwhile, GBP/USD slumped as well yesterday. The pair was down 1.41% for the day.

The gold price plummeted over 2.4% on Tuesday, and rebounded back slightly after touching a daily low below $1764 in the late European session, now hovering slightly below 1770.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
USDFOMC Meeting Minutes02:00 
EURECB Publishes Account of Monetary Policy Meeting19:30 
USDADP Nonfarm Employment Change (Jun)20:15200K
USDInitial Jobless Claims20:30230K
CADIvey PMI (Jun)22:00 
USDCrude Oil Inventories23:00-0.569M

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