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EUR/USD is now trading below the big 1.2000 handle. Can the bears sustain a longer-term dowtrend for the euro?

Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at NZD/USD’s retracement from a downtrend ahead of top-tier releases from New Zealand. Be sure to check that out to see if there is still a potential play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

  • Japan, South Korea, and China’s markets out on bank holidays
  • Kashkari says Fed shouldn’t cut off jobs recovery prematurely
  • RBNZ prepared to tighten lending further as house prices soar
  • Yellen clarifies inflation remark, sees no need for Fed to hike
  • Japan reportedly considering extending Covid state of emergency, casting doubts on Tokyo Olympics
  • Australia construction index eases from record high in April – AiG
  • New Zealand jobless rate unexpectedly fell in first quarter
  • Oil prices rise after steep drop in U.S. crude inventories
  • Australia, NZ dollars regain altitude as domestic economies run strong
  • Asia shares subdued by tech retreat, U.S. futures steady

Upcoming Potential Catalysts on the Economic Calendar:

  • European Commission’s economic forecasts on tap
  • ADP’s non-farm employment change at 9:00 am GMT
  • Fed’s Evans to talk monetary policy at 1:30 pm GMT
  • ISM’s services PMI at 2:00 pm GMT
  • EIA crude oil inventories at 2:30 pm GMT

What to Watch: EUR/USD

EUR/USD 1-hour Forex Chart

EUR/USD 1-hour Forex Chart

In case you missed it, EUR/USD is now trading below the big 1.2000 major psychological handle.

Is EUR/USD ready for a longer-term reversal? We know that the 100 SMA has already crossed below the 200 SMA on the 1-hour time frame.

Today’s PMI releases from the Eurozone and the U.S. will likely give us more clues. Last week’s U.S. GDP release has shown that Uncle Sam is off to a good start this year.

If today’s Eurozone PMIs miss their expectations, or if traders continue to worry about major central banks like the Fed taking the punch bowl away in the foreseeable future, then we could see EUR/USD extend its downswing below 1.2000. Maybe it could even head for the 1.1940 area of interest!

If the anti-dollar or risk-friendly vibe from the Asian session extends to London and U.S. trading, though, then EUR/USD could bounce from its current levels. Watch out for a possible trip to the 1.2050 – 1.2070 area where the SMA crossover and key inflection points are.