Euro extends decline below 1.1050 against US Dollar as focus turns to US PPI

• Near 1.1047 against the US Dollar, the Euro draws modest buying interest, though its outlook remains unclear.
• Rate increases at each of the next three Fed policy meetings are now expected by TD Securities.
• October’s US PPI release is the next focus for investors.

Near 1.1047 against the US Dollar (USD), the Euro (EUR) has found tentative support in Friday’s European session. Expectations of more near-term interest rate increases from the Federal Reserve (Fed) than previously anticipated are underpinning the US Dollar’s outperformance, leaving the outlook for the major currency pair uncertain.

Thursday’s 19-month high of 103.24 remains within reach of the US Dollar Index (DXY) at the time of writing. The index measures the Greenback against a basket of six major currencies.

TD Securities raise expectations for Fed tightening

A more hawkish assessment of the near-term policy outlook has led TD Securities to add January to its expected schedule of Fed rate increases. The firm’s strategists now anticipate "25bp hikes in December, January, and March," having previously forecast increases only in December and March.

The risk that price pressures will remain elevated underpins TD Securities’ expectations of additional Fed tightening. Warning that the "Fed could hike more if inflation remains strong while the labor market accelerates," the firm also highlighted the potential for a pause. Policymakers, it cautions, "could also halt tightening if uncertainty begins to weigh on the labor market or in the event equities begin a rapid sell-off."

A monthly increase of 0.4% in October’s headline US Producer Price Index (PPI), down from 1.3% in September, is forecast ahead of the release at 13:30 GMT, which investors are awaiting. Core PPI, which strips out volatile food and energy items, is likewise expected to show a more moderate rise of 0.3%, compared with the previous reading of 0.7%.

For the Euro, attention is on the revised Q3 Gross Domestic Product (GDP) estimate, due at 10:00 GMT. Growth is forecast to remain at the 0.4% reported in the preliminary Q3 figures.

EUR/USD Maintains a Bearish Technical Bias

At 1.1064 on the daily chart, EUR/USD remains well beneath its 20-day exponential moving average (EMA) of 1.1170, leaving the near-term bias bearish. Having failed to regain that EMA, the pair is still edging lower. Meanwhile, a Relative Strength Index (RSI) reading of 35.7 places momentum below the midline but outside oversold territory, suggesting continued downward pressure with little indication of exhaustion.

A daily close above the 20-day EMA at 1.1170 would be required to temper the bearish tone and create scope for a wider corrective rebound, making that level the first significant upside resistance. As the dataset identifies no nearby structural support levels, traders are likely to assess downside risk through price behaviour around the most recent lows. Further rejection beneath 1.1170 would strengthen the view that rallies remain susceptible to selling pressure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)