Euro fades below 1.1700 as US Dollar rebounds on yields

• EUR/USD fails to hold 1.1700 despite fresh three-month high.
• Solid jobless claims revive Dollar demand as yields rebound.
• Flash PMIs could shape Fed and ECB rate expectations.

The Euro remains steady below 1.1700 after failing to hold gains above it, despite hitting a three-month high. Broad US Dollar strength kept EUR/USD from ending Thursday’s session above the 1.1700 mark, with the pair finishing at around familiar levels, unchanged from Thursday’s opening price.

EUR/USD stalls as stronger yields support Dollar before Flash PMIs

The Greenback’s recovery was sparked by the rise in US Treasury yields, erasing some of Wednesday’s losses, following the US Treasury's announcement that it would increase buybacks of long-dated bonds from $2 billion to $4 billion. 

The US Dollar Index (DXY), which tracks the advance of the Dollar against a basket of six peers, is up 0.10% at 98.84. The move capped the shared currency’s advance past 1.1700, which could’ve opened the door to challenge the 1.1800 figure, a level last seen on April 17.

US jobs data showed the labour market remains solid, despite the dismal US NFP report in July. Jobless claims for the week ending August 15 were better than expected at 206K, below forecasts for a 210K jump and the previous print of 212K.

Fed officials Alberto Musalem of the St. Louis Fed and Mary Daly of the San Francisco Regional Bank crossed the wires. The former said they supported a rate hike at the July meeting, though they adopted an open-minded approach at the September meeting. On the contrary, Daly said that monetary policy is appropriate and that the US central bank's credibility remains firm.

Minutes from the Fed's July meeting showed concern about inflation deepened, with several policymakers ready to raise rates and many saying a hike would be needed if inflation doesn't decline toward 2%.

The swaps market had priced in a 35% chance of a rate hike in September. Meanwhile, the odds for December stay close to 64% according to Prime Terminal.

In the Eurozone, Germany’s Producer Price Index (PPI) for July rose from -0.3% to 1.1% MoM, while for an annual basis, it expanded fron 1.8% to 3%, exceeding forecasts of 2.7%.

Attention now turns to tomorrow's Flash PMIs data for France, Germany, the Eurozone and the United States.

EUR/USD Price Forecast: Technical outlook

In the daily chart, EUR/USD trades at 1.1681, extending its advance above the cluster of reclaimed supports around the former trend-line break at 1.1456 and the triple simple moving average (50, 100, 200) now tracking near 1.1472. This positioning above key underlying demand suggests a bullish near-term bias, while the Relative Strength Index (14) at 73.13 signals overbought conditions that could temper further upside and favor periods of consolidation or shallow corrective pullbacks.

On the topside, the next notable resistance is the horizontal barrier at 1.1849, which caps the immediate bullish scope unless buyers can secure a daily close above it. On the downside, initial support is located at the current price region around 1.1681, with deeper protection seen at the broken descending trend line near 1.1456 and the grouped triple simple moving average around 1.1472, where any retreat would be expected to attract renewed buying interest while the broader constructive structure remains intact.

(The technical analysis of this story was written with the help of an AI tool. Know more.)