Breaking: EUR/USD breaks below 0.9900 for the first time since Dec 2020
05.09.2022, 05:04

Breaking: EUR/USD breaks below 0.9900 for the first time since Dec 2020

EUR/USD has breached the 0.9900 key support for the first time since December 2020, extending its declines amid unrelenting US dollar demand across the board. Risk-aversion bolsters the safe-haven demand for the greenback at the start of the week, despite Friday's mixed US labor market report. 

The deepening European energy crisis has exacerbated concerns about an imminent global recession, killing the appetite for riskier assets. Gazprom halted its key European gas pipeline indefinitely after G7 leaders agreed to implement a price cap on Russian oil last Friday. Some media outlets reported on Saturday that the Russian oil giant has restarted gas deliveries to Europe via Ukraine, although there is no official confirmation about it so far.

The US dollar is shrugging off receding bets for a 75 bps Fed rate hike this month on an unexpected uptick in the US unemployment rate while the headline US Nonfarm Payrolls outpaced expectations, arriving at 315K vs. 526K previous. The odds for a 75 bps September Fed rate hike have dropped sharply to around 55% following Friday’s US jobs data vs. 75% pre-NFP.

All eyes will remain on the energy crisis in the old continent ahead of the critical ECB rate hike decision this Thursday. The central bank remains on track for a 75 bps rate hike this week, with markets wagering an 80% probability. The ECB policy announcement is widely anticipated and, therefore, investors could see the expected 75 bps rate hike as a good EUR selling opportunity.

EUR/USD: 15-minutes chart

EUR/USD: Technical levels

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