EUR/USD: month-end squaring to see the 1.18 handle before week is out?

Currently, EUR/USD is trading at 1.1788, up 0.37% on the day, having posted a daily high at 1.1805 and low at 1.1721.

EUR/USD has been consolidating in a range between 1.1804 and 1.1766 in Thursday's NY session, with rallies faded although with higher lows, something that we have not seen this week so far as month-end typically sees some profit taking and squaring up. 

There is very little out there supporting the euro's upside fundamentally while traders tire chasing the possibility of ECB timings for a reduction of their QE programme as a trade to pursue. Germany's CPI will do little to support the bid with only two states at or above the ECB's 2% target. ECB's Praet said that they are talking about recalibration rather than an exit from QE and Draghi earlier the week reaffirmed that the ECB is not in a position to start trimming QE yet. 

Eurozone: Will EUR strength weigh on GDP growth? - Wells Fargo

Instead, the theme is back with a stronger dollar, for the near term at least, on the back of the recent tax cut announcements, pro-risk sentiment, and the US getting its fiscal house in order. However, we have seen some doubts priced out of the dollar today with S.Mnuchin who was speaking and attempting to convince us that the government is committed to getting the tax legislation completed by year-end - although was not convincing enough for the DXY was still under pressure despite the reaffirmation from the White House.

US Treasury Sec Mnuchin: Committed to getting tax legalisation done by year end - LiveSquawk

Still a long way to go for tax reform - Danske Bank

Meanwhile, CME Group’s FedWatch tool now sees the probability of a rate hike in December at just above 76% and the divergence between the Fed and a lagging ECB keeps the spread underpinned in favour of the US dollar. However, US yields today have slipped to 2.2996% the low in the ten years supporting the euro higher in the NY session.

However, in the wake of the reflation trade and renewed reasons for dollar strength post Yellen's recent speech that had something for everyone, eyes are still fixated on EUR/USD flows to the downside should the major not be able to pick itself up above the 1.18 handle in any meaningful way with risks below towards 38.2% of the June-Sept 1.1119-1.2092 rise at 1.1720. This was a level breached on Wednesday and could open up a run towards 1.1515 at the base of the cloud.

EUR/GBP bias still down, watching for break of 0.8743 14th July low

EUR/USD levels

Analysts at Commerzbank explained that EUR/USD’s outlook is negative following the erosion of the 5-month uptrend and the 1.1836/23 September lows. "we look for further weakness to initially to the 1.1662 August low and then the mid-June high at 1.1296 and the more important 1.1110 end of May low. Intraday rallies should fail ahead of 1.1820 and remain capped by 1.1908, the 20-day ma," argued the analysts at Commerzbank.