EUR/USD trying to bottom at 1.1535 after plunging from 1.1700 area
29.10.2021, 18:12

EUR/USD trying to bottom at 1.1535 after plunging from 1.1700 area

  • The euro attempts to find support at 1.1535 after losing more than 1% on the day.
  • The US dollar appreciates with the investors bracing for the Fed's meeting next week.
  • Higher US bond yields and hawkish Fed expectations have crushed the euro.

The euro is attempting to hit a bottom at 1.1535 after plummeting more than 1% on the day. The pair has dropped like a stone on Friday, crushed by a combination of factors and a stronger US dollar.

The euro plummets with the US dollar firming up

The common currency has lost on Friday all the ground it gained on Wednesday and Thursday’s rally, weighed by the US dollar’s strength. End-of-the-month moves, as the market positions for the Federal Reserve’s monetary policy meeting next week and higher US Treasury bonds might have been the main reason for the sharp EUR/USD reversal.

The Bureau of Economic Analysis revealed today that US Core Personal Consumption Expenditures, the Fed’s favourite inflation gauge, accelerated 3,6% year-on-year in September. These figures come to reaffirm the theory that the US central bank will be forced to accelerate its monetary normalization plans, which, less than one week ahead of November’s meeting, has boosted demand for the USD,

Against this backdrop, US-T bond yields edged up again, with the 10-year note reaching levels near 1.6%, which has increased bullish pressure on the US dollar.

Technical levels to watch

 

 

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