EUR/USD looks vulnerable below 1.1165, focus shifts to US data

The EUR/USD pair is back on the offers, despite negative European equities, as the greenback extends post-FOMC gains against most of its major peers.

EUR/USD faces rejection near 10-DMA at 1.1226

The spot failed to take-out stiff resistances lined up near 1.1225 region, and fell back into losses amid notable US dollar demand across the board backed by renewed strength seen in shorter-duration Treasury, which usually mimics the Fed rate hike expectations. Meanwhile, the USD index is printing fresh daily tops at 97.21, up +0.30% on the day.

The Fed hiked rates yesterday by 25 bps, as widely expected, but it was the balance sheet normalization plan unveiled that offered markets a hawkish surprise. Moreover, Yellen sounded upbeat on the economic prospects, leaving doors open for one more rate hike this year.

The EUR/USD pair remains under pressure also on the back of divergent monetary policy outlooks between both continents. Focus now shifts towards the jobless claims, industrial production and Philly Fed manufacturing index, all of which could offer fresh impetus to the buck.

EUR/USD Technical Levels

Karen Jones, Analyst at Commerzbank notes: “EUR/USD continues to struggle at 1.1300: The Euro continues to hold below the 1.1300 November 2016 high, and the minor new high seen yesterday was not confirmed by the daily RSI. The near term risk is that losses will extend to the 2 month uptrend at 1.1166. Below here would allow for allow for a retracement back to circa 1.1010. This guards the 200 day ma at 1.0824. Intraday rallies are indicated to struggle circa 1.1240.”