EUR/USD approaches 1.10 as dollar deflates

The now softer tone in the greenback is allowing EUR/USD to return to the vicinity of the psychological handle at 1.10 the figure.

EUR/USD attention to data, Fedspeak

The pair is bouncing off recent 3-month lows in the proximity of 1.0960 as the ongoing rally in the US dollar seems to be taking a breather at the beginning of the week.

Despite the current recovery, spot remains under pressure in light of the increasing expectations of a rate hike by the Federal Reserve at its meeting in December, woth CME Group’s FedWatch tool now signaling the probability of a rate hike at 64%.

Additionally, yields in the US money markets keep the positive performance as of late, with the 10-year benchmark climbing to 1.80% on Friday, level last seen in June.

The latest CFTC report showed speculators have increased their EUR net short positions to the highest level since early August during the week ended on October 11.

In the data space, EMU’s final CPI figures for the month of September are due later ahead of US NY Empire State manufacturing index, September’s Industrial Production and Capacity Utilization and the speech by FOMC’s VP S.Fischer on ‘Low Interests Rates’ at the Economic Club of New York Luncheon.

EUR/USD levels to watch

The pair is now gaining 0.14% at 1.0987 facing the next resistance at 1.1003 (7-month prev. support now resistance line) followed by 1.1051 (4-month prev. support now resistance line) and finally 1.1146 (20-day sma). On the flip side, a breakdown of 1.0964 (low Oct.17) would target 1.0950 (low Jul.27) en route to 1.0909 (low Jun.24).