EUR/USD finds itself under pressure on Wednesday, as the pair trades in the mid-1.34 range. The euro has fallen to its lowest level since November, and has slipped over 200 points in July. The violence in Gaza and Ukraine, weak Eurozone numbers and talk of a rate hike in the US have boosted the US dollar at the expense of the euro. Will the downward trend continue? On the release front, there are just two events on the schedule. Eurozone Consumer Confidence has been weak, and little change is expected in the June release. In the US, the sole is event is Crude Oil Inventories.
 Here is a quick update on what’s moving the pair.
- EUR/USD has shown little movement in the Asian and European sessions, as the pair remains below the resistance line of 1.35.
- Current range:Â 1.3450 to 1.35.
Further levels in both directions:Â 
- Below: 1.3450, 1.34, 1.3375 and 1.33.
- Above: 1.35, 1.3550, 1.3585, 1.3610, 1.3650 and 1.3677.
- On the downside, 1.3450 is under strong pressure and could break during the day. 1.34 is next.
- The round number of 1.35 remains an immediate resistance line. 1.3550 follows.
EUR/USD Fundamentals
- 14:00 Eurozone Consumer Confidence. Estimate -6 points.
- 14:30 US Crude Oil Inventories. Estimate -2.1M.
*All times are GMT.
For more events and lines, see the EUR/USDEUR/USDEUR/USDEUR/USDEUR/USD.
EUR/USD Sentiment
- Ukraine tensions weigh on euro: Geopolitical tensions are bad news for the markets, which crave stability. With violence continuing in Ukraine nervous investors have rallied around the safe-haven US dollar at the expense of other currencies, including the euro. Last week’s downing of a Malaysian Airlines jet, apparently by pro-Russian separatists, has seriously frayed relations between the West and Russia, which have already been strained since the latter annexed Crimea. Meanwhile, fighting continues between the separatists and Ukrainian forces in Eastern Ukraine. The Europeans are threatening stronger sanctions against Russia, and escalating tensions have hurt the shaky euro.
- Gaza violence escalates: The fighting has in Gaza between Israel and Hamas has intensified as Israel’s land offensive continues. As long as oil production in other countries is not disturbed, there will be no impact on the markets. Fighting in Gaza between Hamas and Israel continues to rage, as the international community scrambles to try to broker a cease-fire between the two sides. However, the fighting, which is now in its third week, shows no signs of abating.
- US inflation numbers unimpressive: US numbers were a mix on Tuesday. Inflation numbers continue to struggle, as Core CPI posted a paltry gain of 0.1%, shy of the estimate of 0.2%. The key index has looked anemic in 2014, with its highest gain this year at just 0.3%. CPI was a bit stronger, as it gained 0.3% last month, matching the forecast. Meanwhile, Existing Home Sales jumped to 5.04 million, surpassing the estimate of 4.94 million. This was the best showing we’ve seen since October, and follows a disappointing release from Housing Starts, which was published last week.
- Fed hints rate hike likely in 2015: Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill last week. Yellen declined to directly answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. The note about “stretched valuations†in some sectors of the equity markets caught investors’ attention and could serve as a hint that the Fed is set to tighten sooner. The dollar eventually reacted positively.
- Eurozone inflation remains weak: Try as it might, the ECB can’t seem to coax much inflation out of the Eurozone economy. Final euro-zone CPI for June matched the early print at 0.5% and shows that inflation remains at rock bottom levels. This is well below the central bank’s target of 2%. Germany, the Eurozone’s largest economy, is also suffering from weak inflation. PPI came in at a flat 0.0%, and the manufacturing inflation index has failed to post a gain in 2014. Faced with weak inflation and growth levels in the Eurozone, the ECB will be under pressure to take some action at its August policy meeting.   Â
More: EUR/USD in downtrend as USD is on the move – Elliott Wave Analysis
