EUR/USD challenging lows near 1.1120, ZEW eyed

The single currency is extending its weekly downside today, now relegating EUR/USD to the 1.1120 region, or daily troughs.

EUR/USD attention to ZEW

The pair is intensifying the bearish fashion so far this week, retreating for the second session in a row as the greenback continues to push higher backed by swelling expectations of a rate hike by the Federal Reserve at its December meeting.

In fact, and according to Fed Funds futures prices tracked by CME Group’s FedWatch tool, the probability of higher rates by year-end is now at 64%, picking up extra pace despite the recent disappointing figures from September’s Payrolls.

Adding to USD buying, Chicago Fed C.Evans (2017 voter, dovish) realized at his speech in Sydney yesterday that the US policy ‘may well be changing soon’, although he advocated for a slow pace of tightening.

Regarding positioning and according to the latest CFTC report, it is worth recalling that speculative EUR longs have climbed to the highest level in the last 5 weeks, while net shorts have ticked to 2-week tops during the week ended on October 4.

EUR/USD levels to watch

The pair is now losing 0.20% at 1.1114 and a break below 1.1101 (low Oct.7) would target 1.1076 (2014-2016 support line) en route to 1.1043 (low Aug.5). On the other hand, the next up barrier is located at 1.1173 (200-day sma) followed by 1.1202 955-day sma) and finally 1.1248 (resistance line off 2016 high).