• The EUR/USD outlook turns negative as the Eurozone is hit by the US-EU trade deal.
• European leaders voice opposition against the deal amid fear of economic backlash.
• The US dollar sees increased demand as the Fed may hold rates steady for longer.

The EUR/USD outlook weakened as the pair continued its decline on Tuesday, following a 1.3% slump on Monday. It was the worst single-day performance of the euro in several months. The pair marked a fresh low at 1.1522 before the European session.

The catalyst behind the downfall was a trade agreement between the US and the EU, which appears heavily skewed in favor of the US. The news triggered a fresh wave of economic backlash across the Eurozone.

The EUR/USD price attempted to bounce from the lows, but the upside remains shallow as markets digest the finer details of the agreement. As per the deal, a tariff of 15% will be imposed on the EU imports, while Belgium has committed to purchase gas worth 750 bn EUR from the US along with investing an additional 600 EUR in American technology and infrastructure. The situation raises fears as the capital would drain out of Europe, which will impact the Eurozone’s GDP growth and trade surplus.

The French PM called the deal a “submission,” while the German Chancellor warned that the deal could damage the industrial base of Europe. The EC’s effort to frame the deal as a diplomatic success has fallen flat, weighing on the financial markets and the euro’s long-term fundamentals.

On the other hand, the US dollar has attracted a strong demand with a string of upbeat data along with a resilient American labor market. As a result, the Fed is expected to hold the rates steady, lending more room to the dollar bulls.
 

Key Events for EUR/USD Today

The only major data on the day is US JOLTs Job Openings, which is expected to show modest cooling in labor demand.
 

EUR/USD Technical Outlook: Pullback After a Solid Sell-off
 

(Click on image to enlarge)

EUR/USD 4-hour chart
 

The EUR/USD outlook on the 4-hour chart is slightly encouraging for the buyers, as the price found the floor just above the 1.1520 mark and is forming a bullish pinbar pattern. The price is already extremely oversold, with RSI at the 24.0 level.

However, this pullback could only be a retest of the broken support around 1.1580, as the key moving averages are well above the price. The potential bearish crossover may pose a threat to the buyers. A substantial move above the 1.1600 level may alter the scenario.

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