EUR/USD cracks 1.1700 on rising USD, 1.1660 on sight?

The EUR/USD pair finally broke below the key 1.1700 support, after having flirted it over the last hours, as the bears remain charged up for a test of August lows at 1.1662.

EUR dumped amid holiday-thinned markets

The main currency pair keeps losses and remains vulnerable for the second day in a row, as the US dollar keeps marching higher against its main competitors on the back of solid US macro news and rising Dec Fed rate hike expectations.

The US ISM manufacturing PMI data came in much better-than markets’ expectations and added to the US Q2 GDP revision-induced strength seen in the US dollar, while bolstering the odds of a Dec Fed rate hike and three more rate hike next year.

The spot printed fresh two-month lows of 1.1696 as the USD index refreshed seven-week tops at 93.78 levels, while higher Treasury yields continue to underpin the sentiment around buck.

Also, Sunday’s catastrophic Spanish vote-led violence continues to add to the weakness around the Euro. Meanwhile, downbeat Eurozone CPI and business climate weighs down on the chances of the ECB resorting to tapering anytime soon.

Looking ahead, amid holiday-thinned trading, the major will continue to take cues from the USD price-action and upcoming Fedspeaks. In the meantime, the Eurozone PPI data will be also eyed for fresh impetus on the EUR.

EUR/USD Technical Set-up  

Karen Jones, Analyst at Commerzbank, explains: “EUR/USD remains under pressure following the recent erosion of the 5 month uptrend and the 1.1836/23 late August and September lows. Intraday rallies are indicated to fail circa 1.1830. We look for further weakness initially to the 1.1662 August low and then the mid-June high at 1.1296 and the more important 1.1110 end of May low.”