EUR/USD turns south below 1.0000 as dollar rebounds ahead of US data

• EUR/USD slips after running into resistance just below parity.
• The US dollar rebounds with yields as hawkish RBNZ move revives aggressive Fed rate hike bets.
• Falling wedge breakout meets resistance at 50-DMA, as focus shifts to critical US data.

EUR/USD is turning south towards 0.9950 after meeting fresh supply just below the parity mark. The broad US dollar rebound is aiding the renewed downside in the main currency pair.

The dollar is finding fresh buyers, staging a decent recovery, as odds of aggressive Fed tightening are back in play after the Reserve Bank of New Zealand (RBNZ) hawkish 50 bps rate hike. The RBNZ move poured cold water over hopes for a pause or slowdown in the Fed’s intentions for aggressive hikes. This narrative has also helped the US Treasury yields rebound across the time curve.

Meanwhile, risk tone has turned slightly cautious, as investors now look forward to the US ADP jobs and ISM Services PMI data for fresh hints on the size of the Fed rate hike in November. On Tuesday, a sharp drop in the US job openings smashed the dollar across the board, as the data tempered super-sized Fed rate hike expectations.

On the EUR side of the equation, investors remain edgy amid the looming European energy crisis even though the EU energy chief said late Tuesday, “we have enough storage to get through winter without Russian gas in event of mild weather.” Meanwhile, the EU agreed to new sanctions on Russia, including the oil price cap, details of which will be released on Wednesday.

EUR/USD: Technical outlook

Looking at EUR/USD’s daily chart, the extension of a falling wedge breakout yielded on Monday failed just below the slightly bearish 50-Daily Moving Average (DMA) at 1.0016.

Sellers, therefore, look at the horizontal 21 DMA at 0.9896 should the retreat extend. Ahead of that, the 0.9950 psychological level could come to buyers’ rescue.

EUR/USD: Daily chart

The 14-day Relative Strength Index (RSI) has turned flat but holds above the 50.00 level, keeping bulls hopeful.

Daily closing above the 50 DMA barrier is needed to extend the uptrend towards the September 20 high of 1.0050.

Further up, bulls will challenge the 1.1100 round level on the continuation of the bullish momentum.

EUR/USD: Additional levels to consider