EUR/USD: bulls under pressure at 1.17 the figure, 1.1662 on the cards?
Currently, EUR/USD is trading at 1.1700, down -0.52% on the day, having posted a daily high at 1.1780 and low at 1.1699.
Catalan leaders are divided over their next step - Bloomberg
Despite the political climate in the EZ and Spain due to the Catalan concerns EUR/USD remains resilient on the 1.17 handle while the FX market continues to treat the crisis as regional problem expecting an eventual resolution. Asia was a very quiet session within a range of 1.1751/63 with resistance at 1.1785/95 where the 10-day MA and Wednesday's high converge - activity was likely suppressed by event risk in the U.S. jobs report on Friday.
US Trade Deficit: Stronger global growth and a weaker dollar - Wells Fargo
However, the European bulls gave way to a slide with a resurgence in the greenback that extended its gains on the US data breaking back below the 1.1720 38.2% Fibo of the June-Sept rise.
US: New orders for manufactured goods in Aug increased $5.4 billion, or 1.2%
The Dollar Index climbed from 93.25 two-day highs at 93.97 the high so far and is testing a weekly top. The US dollar gained strength on the back of rising Treasury yields following US data and comments from Federal Reserve officials.
Fed's Williams: Expects gradual rate hikes
Fed’s Harker: Penciled in 3rd hike in December - CNBC
Today’s reports suggested that the negative effects of the hurricanes on economic growth were limited. Initial jobless claims decreased by 12K to 260K (against 265K expected), the trade deficit narrowed August amid rising exports and factory orders rose 1.2% (vs 1.0%). Two FOMC members, Williams and Harker spoke today signalling support for another rate hike before the year-end.
EUR/USD downside levels:
- 1.1696 Daily Low Oct 3
- 1.1662 Daily Low Aug 17
- 1.1650 Daily Low Jul 27
- 1.1613 Daily Low Jul 26
Valeria Bednarik, chief analyst at FXStreet explained that the pair has broken below a major long term Fibonacci level, the 23.6% retracement of its March/September rally around 1.1735, and while still too close to it to confirm a long-term bearish breakout, standing below the level adds to the bearish case.
"Short term and according to the 4 hours chart, the risk is towards the downside, with the 20 SMA capping recoveries in the US session, and technical indicators extending their declines within negative territory. A weekly close below 1.1660, with the dollar backed by a strong US NFP report, will favor a downward extension towards 1.1510 next week the 38.2% retracement of the mentioned monthly advance," Valeria explained further.