EURUSD took a hit. Overview for 06.07.2022

EURUSD plummeted to its 20-year lows amid global risk aversion.

The major currency pair quickly plunged on Wednesday. The current quote for the instrument is 1.0263.

The last time the EUR hit this level was in December 2002.

What happened? Nothing new, actually. Investors are once again worrying about the recession and really started to believe that the situation was extremely negative. This reaction forced global risk aversion. Even the news that US President Joe Biden offered to remove some of the tariffs on Chinese imports couldn’t smooth things over. This move would help to reduce inflation and the risks of a trade war between the countries. However, investors have more important things to think about right now and fundamental news is on the back burner. Markets are currently ruled by emotions and chaos.

Another thing that pushed the EUR downwards was a leap in gas prices in Europe. Reducing deliveries from the major suppliers and problems with finding alternatives to replace required volumes caused a new wave of the price surge. The current energy crisis is escalating – it scares market players, although it’s not even a winter season yet.

The statistics from the US published yesterday were surprising. The Factory Orders gained 1.6% m/m in May against the expected reading of 0/5% m/m. Demand is more stable than anticipated and it’s good news.

Later today, investors’ attention will be focused on market sentiment and the FOMC Meeting Minutes. Probably, market players will try to find any hints at a more aggressive monetary policy tightening in July. If so, the “greenback” will get additional support.