As the euro struggles to find demand following disappointing economic data, the EUR/USD pair dropped for the second consecutive day on Wednesday. Additionally, the tensions between the United States and China survive despite U.S. House Speaker Nancy Pelosi ultimately leaving Taiwan to resume her Asian trip, encouraging a more risk-averse market environment.
The EU S&P Global Services and Composite PMIs were updated upward on the data front, but the business production decline was confirmed as the Composite PMI reading was 49.9. Additionally, EU retail sales in June dropped 3.7 percent YoY and 1.2 percent MoM, which was below market expectations and contributed to the decline in the value of the euro.
While being revised upward, the US S&P Global Services and Composite PMIs remained in contraction territory. The ISM services PMI, which came in at 56.7, above the market consensus of 53.5 and indicating sector development, gave the dollar some support. In that regard, the DXY index's gauge of the US dollar increased to 106.82 before declining.
The following support levels on the downside are indicated around 1.0100, 1.0000, and finally the cycle low of 0.9952. On the other hand, to release the pressure now, EUR/USD must close above the 20-day SMA, which is now around 1.0155. In that case, the 1.0294 peak from Tuesday and the 1.0350 level serve as the next resistance levels.
