Euro falls below 1.0700 as investors focus on upcoming Fed speeches

• The Euro looks offered against the US Dollar.
• European markets open Tuesday’s session in a mixed tone.
• Germany Industrial Production surprised to the downside.

The Euro (EUR) adds to Monday’s decline against the US Dollar (USD), motivating EUR/USD to retreat to the area below 1.0700 on Tuesday.

The Greenback manages to regain further balance and lifts the USD Index (DXY) to the mid-105.00s against the backdrop of renewed weakness in risk appetite, particularly in response to weaker trade results in China. The move lower in the pair is also accompanied by a knee-jerk in both US and German yields.

Regarding monetary policy, markets expect the Federal Reserve (Fed) to keep policy unchanged. The potential for an interest-rate hike in December appears to have lost momentum, particularly after the latest FOMC gathering and Friday's publication of weaker-than-anticipated Nonfarm Payrolls data for October.

As for the European Central Bank (ECB), investors also favour an extended pause of its rate-hiking cycle, most probably until the second half of the year.

On the economic calendar, German Industrial Production contracted more than estimated at a monthly 1.4% in September and 3.7% vs. the same month of 2022. In addition, German Construction PMI receded to 38.3 in October. Looking at the broader eurozone, the Construction PMI ticked lower to 42.7 during last month and Producer Prices are due at 10:00 GMT.

Across the Atlantic, Balance of Trade results for September are due at 13:30 GMT, prior to the IBD/TIPP Economic Optimism index and Consumer Credit Change.

Additionally, market participants are expected to closely follow speeches by FOMC Governor Michael Barr (permanent voter, centrist), FOMC Governor Christopher Waller (permanent voter, hawk), NY Fed President John Williams (permanent voter, centrist), Dallas Fed President Lorie Logan (voter, hawk), Minneapolis Fed President Neel Kashkari (voter, centrist) and Chicago Fed President Austan Goolsbee (voter, centrist).

Daily digest market movers: Euro loses traction as risk appetite fades 

• The EUR puts the 1.0700 mark to the test against the USD.
• US and German yields trade slightly on the defensive.
• The Fed is seen keeping its monetary policy unchanged in December.
• The ECB is likely to keep its rates unchanged until H2 2024.
• The Middle East conflict looks everything but abated.
• The RBA raised its OCR by 25 bps, as widely expected.
• Chinese trade balance figures disappoint in October.

Technical Analysis: Euro faces immediate hurdle around 1.0800

EUR/USD corrects lower and revisits the sub-1.0700 zone on Tuesday.

The November peak of 1.0754 (November 6) follows next on the upswing for EUR/USD, seconded by the crucial 200-day Simple Moving Average (SMA) at 1.0805 and another weekly top of 1.0945 (August 30) before the psychological barrier of 1.1000. Beyond this zone, the pair may encounter resistance at the August high of 1.1064 (August 10), ahead of the  weekly peak of 1.1149 (July 27) and the 2023 high of 1.1275 (July 18).

Sellers, on the other hand, are anticipated to face support at the weekly low of 1.0495 (October 13), before approaching the 2023 bottom at 1.0448 (October 15) and the round number of 1.0400.

The pair's outlook is predicted to remain bearish as long as it remains below the 200-day SMA.