• EUR/USD retreats from intraday high during a sluggish session.
• Growth concerns underpin US dollar demand even as downbeat data challenges the pair bears.
• German energy crisis emphasizes ZEW data for fresh impulse.
• Second-tier US economics could also entertain traders ahead of the key Wednesday.

EUR/USD licks its wounds around 1.0160, after a brief corrective pullback, as fears surrounding economic slowdown join pre-data anxiety. With this, the major currency also justifies the bearish technical formation during early Tuesday morning in Europe.

Europe works on a nuclear deal with Iran to battle the energy crisis at home. However, Tehran’s response appears not so positive as Tehran's "additional views and considerations" to the EU text would be conveyed later, per Reuters. It’s worth noting that German Economy Minister Robert Habeck said on Monday, as reported by Reuters, “Germany's Russia-dependent energy model has failed and isn't coming back." 

On the other hand, softer prints of the US and China data and downbeat Treasury yields also portray the economic fears, not to forget the Sino-American tussles. On Monday, US NY Empire State Manufacturing Index for August dropped to -31.3 from 11.1 in July and 8.5 in market forecasts. Further, the US August NAHB homebuilder confidence index also fell to 49 versus 55, its lowest level since the initial months of 2020. On the other hand, China released downbeat Retail Sales and Industrial Production data for July while also conveying a rate cut from the People’s Bank of China (PBOC).

Even so, market chatters that China’s efforts aren’t enough to restore the market’s sentiment appear to exert additional downside pressure on the EUR/USD prices.

Furthermore, the fears about the US-China tussles grow and weigh on the EUR/USD prices as Xinhua reported that China imposes sanctions on a number of Taiwan separatists. Previously, the visit of multiple US lawmakers to Taiwan irritated Beijing, which in turn led to fierce military drills near the Taiwan border and an escalation of the geopolitical risks.

Amid these plays, the US 10-year Treasury yields snap a two-day downtrend around 2.78% while the S&P 500 Futures decline 0.10% intraday at the latest.

Given the German crisis, today’s ZEW Economic Sentiment data for August will be crucial to gauge the economic health of the European powerhouse. That said, firmer data could help EUR/USD bears to take a breather ahead of the US session’s scheduled release of the US Building Permits, Housing Starts and Industrial Production numbers for July for fresh impulse. Above all, Fed Minutes will be crucial amid indecision over the US central bank’s next move.

Technical analysis

In addition to the clear downside break of the 21-DMA and monthly ascending trend line, descending RSI (14) and receding bullish bias of the MACD also keep the EUR/USD bears hopeful. With this, the EUR/USD pair becomes vulnerable to visiting the one-month-old horizontal support around 1.0100.

Also read: EUR/USD Price Analysis: Sellers keep control below 1.0200 support-turned-resistance