EUR/USD targets 1.27 as greenback preserves strength ahead of NFP
The EUR/USD pair plummeted to a fresh daily low at 1.1713 in the early NA session and failed to make a meaningful recovery from that level. As of writing, the pair was trading at 1.1720, losing 0.35% on the day.
Earlier in the day, the shared currency came under pressure after the ECB released the minutes of the monetary policy meeting held in September. The meeting accounts highlighted that officials were concerned about the volatility and the speed of the euro rise. Moreover, policymakers debated smaller QE cuts and shorter duration vs bigger reductions with longer duration while some officials argued that the FX impact was underestimated in projection. At the moment, the Euro Index is at 93.80, down 0.25% on the day.
- ECB Minutes: Last stop before tapering - ING
On the other hand, macroeconomic data from the United States continued to suggest that the negative effects of the hurricanes on the economic growth were not going to be as big as initially anticipated. Today's data showed that the weekly initial jobless claims decreased by 12,000 on a weekly basis while the trade deficit narrowed on a monthly basis in August amid rising exports.
- US: Goods & services deficit was $42.4 bln in Aug, down $1.2 billion from $43.6 billion in July
- US: Weekly initial claims was 260,000, a decrease of 12,000 from previous week
Furthermore, FOMC members Williams and Harker during their speeches in the NA session voiced their support for another rate hike before the end of the year. According to the CME Group FedWatch Tool, the markets are pricing a 25 bps December hike probability at 86.7%. Meanwhile, the US Dollar Index is at 93.68, up 0.4% on the day.
- Fed’s Harker: Penciled in 3rd hike in December - CNBC
- Fed's Williams: Expects gradual rate hikes
An upbeat NFP growth with rising wages in the U.S. on Friday could increase the selling pressure on the pair as it would affirm another rate hike.
- NFP Preview: Hurricanes likely pulled down jobs growth - Danske Bank
Technical outlook
With a decisive break below 1.1700 (psychological level), the pair could aim for 1.1660 (100-DMA) and 1.1610 (Jul. 27 low). On the upside, resistances align at 1.1785 (Oct. 4 high), 1.1850 (20-DMA) and 1.1925 (Sep. 25 high).