At the start of the week, the EUR/USD currency broke  below the parity level to hit a new six-week low.

For now, it looks like there will be more losses for the pair. On the other hand, if the parity area breaks convincingly, the pair could hit the low for 2022 at 0.9952 (July 14).

The markets are in “risk-off” mode, and the US dollar is making the most of it by appreciating against other currencies as safe havens.

In its monthly report, the Bundesbank said that a recession in Germany is becoming more likely and that inflation could continue to rise and reach more than 10%. Both of these things hurt the shared currency. Market players are still looking over the FOMC Meeting Minutes and figuring out how to price in speeding up the central bank’s balance sheet reduction.

After the US released the Chicago Fed National Activity Index, which went from -0.25 in June to 0.27 in July, there is nothing else on the macroeconomic calendar to talk about this Monday. The news did not have much of an effect on the broader financial markets.

Before the US market opened,  the yield on the 10-year Treasury note is close to 3%. Government bond yields may stay in the same range.

The flash Purchasing Managers’ Indexes (PMIs) will be released starting tomorrow. A lousy number from Germany could pull the EUR/USD pair below parity in a way that won’t go away.

Conclusion

Long-term, the bearish view on the pair is likely to win out as long as it trades below the 200-day simple moving average at 1.0852.