EUR/USD weak, gravitating around 1.1700

EUR/USD keeps the offered bias intact at the end of the week, although it somewhat managed to bounce off fresh daily lows around 1.1670 in the wake of US payrolls.

EUR/USD bearish, still targets 1.1660

The negative sentiment around the European currency stays everything but abated for the time being, with gains clearly capped in the upper-1.1700s and August’s lows in the 1.1660 area being the current magnet for EUR-bears.

Spot keeps looking south, as prospects of a third rate hike by the Federal Reserve at the November meeting remain well and sound, particularly after the auspicious results from September’s average hourly earnings, a key gauge of wage inflation closely followed by both the Fed and investors. In this regard, CME Group’s FedWatch tool now sees the probability of higher rates by year end at nearly 92%, always based on Fed Funds futures prices.

In the meantime, recent Fedspeak has been USD-supportive, while the likelihood that the Trump’s tax reform proposal could pass legislation in the next months is also another key driver sustaining the buck’s rally, all helping the US Dollar Index to climb to fresh multi-week peaks in tandem with US yields.

On the other hand, EUR seems to have somehow lost the backing of the ECB, as per recent comments by ECB officials showing some preoccupation over the (quick) pace of appreciation of the exchange rate.

EUR/USD levels to watch

At the moment, the pair is down 0.15% at 1.1694 and a break below 1.1670 (low Oct.6) would target 1.1662 (low Aug.17) en route to 1.1595 (100-day sma). On the other hand, the next up barrier emerges at 1.1764 (10-day sma) followed by 1.1833 (55-day sma) and finally 1.1861 (21-day sma).