EUR/USD slides to multi-day lows on softer Eurozone PMIs/Retail Sales data

• EUR/USD witnessed some selling on Wednesday in reaction to softer Eurozone macro releases.
• A modest USD uptick further contributed to the intraday slide to levels just below mid-1.1800s.
• Dovish Fed expectations capped any meaningful USD gains and might help limit the downside.

The EUR/USD pair witnessed some selling during the first half of the European session and dropped to fresh weekly lows, around the 1.1840 region in the last hour.

The pair struggled to capitalize on its modest intraday gains, instead met with some fresh supply near the 1.1880 region in reaction to the downward revision of the Eurozone Services PMI readings for July. The data reaffirmed elevated growth conditions, though at a slightly slower pace than estimated previously.

This was followed by the disappointing release of Eurozone Retail Sales, which recorded a growth of 1.5% MoM in June as against 1.7% expected. The momentum dragged the EUR/USD pair away from one-month tops – levels just above the 1.1900 mark touched on July 30 – and was further fueled by a modest US dollar rebound.

Concerns that the fast-spreading Delta variant of the coronavirus could derail the global economic recovery continued weighing on investors' sentiment. This was evident from the prevalent cautious mood around the equity markets, which along with a modest uptick in the US Treasury bond yields benefitted the safe-haven USD.

That said, receding Fed rate hike expectations might hold the USD bulls from placing any aggressive bets and help limit deeper losses for the EUR/USD pair. Investors might also be reluctant ahead of Friday's release of the US monthly jobs report (NFP), warranting some caution before positioning for any further downfall.

Market participants now look forward to the US economic docket, featuring the release of the ADP report on private-sector employment and ISM Services PMI. Apart from this, the broader market risk sentiment and the US bond yields will influence the USD, which might provide some trading impetus to the EUR/USD pair.

Technical levels to watch