Oct 13 (Reuters) – EUR/USD retreated on Friday, slipping through the 1.05 handle as traders appeared to be unwinding risk exposures and hedging against potential escalation in Middle East tensions, leaving the euro vulnerable to downside risks and potentially a break of the YTD low at 1.0448 should the conflict widen.
Similar moves were seen across a variety of markets, with both oil and gold at weekly highs and safe-haven flows underpinning the dollar.
Elsewhere, a slew of more hawkish U.S. data has played its part in pressuring the single currency as CPI, PPI and U. of Michigan inflation expectations surprised on the topside.
While the data does little to move the needle for the Fed’s November policy decision as officials signal a wait-and-see-stance given moves in the bond market, it does keep the risk a rate hike on the table for the December meeting FEDWATCH.
Technically, with the recent upside capped at 1.0630-35 (2020 COVID low/May 2023 low), Thursday’s key day reversal also adds to EUR/USD’s bearish outlook and thus a close above 1.0630-35 would likely be needed to negate this.
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eurusd daily chart https://tmsnrt.rs/3Ff0yfp
(Justin McQueen is a Reuters market analyst. The views expressed are his own.)
((justin.mcqueen@thomsonreuters.com))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
