EUR/USD pares intraday losses near 1.0950 as US Dollar retreats amid lack of fresh challenges to sentiment

• EUR/USD licks its wounds at the lowest level in a week.
• Italian PM Meloni rules out further challenges to banking sector after windfall tax announcements.
• China debt woes, dovish ECB concerns exert downside pressure on Euro pair.
• Lack of fresh negatives, cautious mood ahead of top-tier data/events prod sellers.

EUR/USD remains pressured at the lowest level in a week, declining to 1.0925 amid early hours of Monday’s European session. In doing so, the Euro pair justifies the market’s rush towards the US Dollar despite the recently positive headlines from Italy.

Italian Prime Minister Giorgia Meloni ruled out further hardships for the banks after announcing a one off 40% windfall tax on them and taking full responsibility of the same. The same joins the US Dollar Index (DXY) retreat from the one-month high to prod the Euro bears.

However, fears of debt market fallouts in China and the looming recession woes in Eurozone exert downside pressure on the EUR/USD price, especially amid the firmer US Treasury bond yields.

Furthermore, the mixed readings of the German Wholesale Price Index (WPI) for July also favor the Euro pair sellers.

That said, a suspension of its bond trading by China’s Country Garden joins the non-receipt of the payments from a subsidiary of Chinese conglomerate Zhongzhi Enterprise Group to bolster the debt woes of China. Elsewhere, Russia’s readiness to equip new nuclear submarines with hypersonic missiles and the US-China trade war also contributes to the risk-off mood, which in turn weighs on the EUR /USD Price.

Elsewhere, the European Central Bank (ECB) officials have teased policy pivot in their latest public appearances while the ECB’s monthly economic outlook highlighted the macro uncertainty and keeps the Euro bears hopeful.

Amid these plays, the S&P500 and Euro Stoxx Futures remain mildly offered while the US 10-year Treasury bond yields grind higher 4.17%.

Looking ahead, light calendar in the bloc joins the cautious mood ahead of Fed Minutes to prod the EUR/USD pair traders. However, the risk-off mood may keep the sellers hopeful.

Technical analysis

EUR/USD needs to provide a daily closing beneath the 100-DMA support of 1.0930 to aim for the 61.8% Fibonacci retracement of May-July upside, near 1.0880, as well as the previous monthly bottom surrounding 1.0835. Failing to do so can trigger the Euro pair’s corrective bounce toward the multi-day-old previous support line, close to 1.1040 at the latest.

Also read: EUR/USD Price Analysis: Euro bears approach 1.0900 as sour sentiment, firmer yields propel US Dollar