EUR/USD: Three reasons to expect a fall below the 1.1660 critical support

EUR/USD is clinging to 1.17. Yohay Elam, an Analyst at FXStreet, lays out three reasons to expect a fall below support at 1.1660 after dead-cat bounce.

Energy crisis

“Shortages of natural gas in Europe may derail the old continent's recovery from the pandemic. That undermines the euro. China is also grappling with electricity shortfalls. Reports about power outages in the Chinese economy may derail global growth and push the safe-haven dollar higher.” 

Debt ceiling

“Senate Republicans have blocked legislation that would allow the US government to continue functioning. This threat is, for now, shrugged off by markets. However, the mood could turn swiftly and boost the greenback.”

Bearish technicals

“Critical support awaits at last month's low, which comes out at 1.1660. Below 1.1660, the next level to watch is 1.1610 and then 1.15. Looking up, resistance awaits at 1.1725, followed by 1.1760 and 1.1790 – all levels that capped EUR/USD attempts to recover.”