EUR/USD inter-markets: potential for a test of 1.1367?

EUR/USD is extending its positive momentum at the beginning of the week, clinching fresh highs in the mid-1.1200s following a renewed offered bias around the buck and a persistent sentiment towards the risk-associated space, reverting the initial pick up in the risk aversion seen in early trade.

Yields in both the US and German money markets are navigating in the red territory today, although the differential spread continues to favour the greenback. Fed Funds future prices have returned to session lows ahead of speeches by FOMC’s Kashkari, Tarullo and Kaplan, while some attention has also shifted towards the first debate between candidates H.Clinton and D.Trump, expected tonight in the US.

USD will remain in the spotligh throughout the week, as market participants will closely follow the slew of Fed speakers scheduled for later in the week, especially after last week’s FOMC meeting and with the potential timing of a Fed’s rate hike taking centre stage.

It is worth mentioning that according to CME Group’s FedWatch tool, the probability of a rate hike in November is at just above 12% and over 48% for the month of December.

In the meantime, EUR/USD faces its initial hurdle around 1.1275, where is located the resistance line off 2016 tops. Once cleared, spot should remain able to challenge minor hurdles until August’s peak near 1.1370.