Euro extends losses below 1.1050 against US Dollar as attention turns to US PPI

• Buying interest offers the Euro some support around 1.1047 against the US Dollar, though uncertainty persists.
• Rate hikes at each of the next three Fed policy meetings are now expected by TD Securities.
• October US PPI figures are in focus for investors ahead of their release.

Some buying support emerges for the Euro (EUR) around 1.1047 against the US Dollar (USD) in Friday’s European session. However, uncertainty continues to cloud the major currency pair’s outlook. The US Dollar is outperforming as markets anticipate more near-term interest rate increases from the Federal Reserve (Fed) than previously expected.

At the time of writing, Thursday’s 19-month high of 103.24 remains the level around which the US Dollar Index (DXY) is holding. The index tracks the Greenback against a basket of six major currencies.

Why has TD Securities adopted a more hawkish Fed outlook?

A more hawkish near-term policy outlook has been adopted by TD Securities, according to its strategists. The firm now forecasts "25bp hikes in December, January, and March," having previously expected increases only in December and March.

The risk that price pressures could stay elevated underpins expectations of additional Fed rate increases, TD Securities noted. It also warned that the "Fed could hike more if inflation remains strong while the labor market accelerates." However, the firm cautions that policymakers "could also halt tightening if uncertainty begins to weigh on the labor market or in the event equities begin a rapid sell-off."

The next focus for investors is October’s US Producer Price Index (PPI), scheduled for release at 13:30 GMT. Headline PPI is forecast to increase at a more moderate monthly pace of 0.4%, compared with September’s 1.3%. Excluding volatile food and energy items, core PPI is also projected to record a more modest rise of 0.3%, against 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 expected to remain at 0.4%, unchanged from the preliminary Q3 reading.

EUR/USD Technical Analysis: Can the Pair Ease Its Bearish Bias?

With EUR/USD trading at 1.1064 on the daily chart, the near-term bias remains bearish. Spot is well below the 20-day exponential moving average (EMA) of 1.1170, and its failure to regain that average has been followed by a continued gradual decline. At 35.7, the Relative Strength Index (RSI) remains below its midpoint but outside oversold territory. This suggests sustained downward pressure, with few indications that selling is becoming exhausted.

A daily close above the 20-day EMA at 1.1170 would be required to soften the prevailing bearish bias and create scope for a wider corrective rebound. That average marks the first significant resistance on the upside. As the dataset identifies no nearby structural support levels, traders are likely to assess downside risks through price behaviour around the most recent lows. Further rejection below 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.)