EUR/USD looks weak, drops to multi-day lows near 1.0100

Sellers returned to the Euro and dragged EUR/USD to multi-session lows in the vicinity of 1.0100 on Tuesday. The EUR/USD rapidly abandoned the area around 1.0250 to retreated nearly 15 cents after EU countries decided to reduce the gas consumption in the next winter, all following the decision by Russian giant Gazprom to cap the supply of gas to the old continent to around 20%.

The decision sparked recession fears in the Eurozone at the time when the IMF cut the growth prospects for 2023 and several major banks now see the region entering recession at some point in Q4.

The EUR/USD pair loses more ground and approaches 1.0100. The US dollar reverses the initial decline and surpasses 107.00.

The US Consumer Confidence tracked by the Conference Board eased to 95.7 in July, while New Home Sales contracted 8.1% MoM in June, or .59M units. Earlier in the session, the FHFA’s House Price Index rose 1.4% in May from a month before.

The EUR/USD remains under pressure in the pre-FOMC and threatens to revisit the 1.0100 region amidst the sudden resumption of the demand for the US dollar.

Renewed market chatter surrounding the probability of an economic slowdown in the Eurozone in the medium term seems to have resurfaced and weigh on the Euro ahead of the upcoming FOMC event on Wednesday.

Price action around the Euro closely follows increasing speculation of a probable recession in the Eurozone, dollar dynamics, geopolitical concerns, fragmentation worries and the Fed-ECB divergence.