The euro has slipped below the key 1.1700 level against the US dollar, with EUR/USD hovering near 1.1695, a decline of about 0.1%. The move reflects a market caught between fading Federal Reserve rate hike expectations and a dollar supported by rising Treasury yields.
On one side, softer US inflation figures have reduced the likelihood of aggressive Federal Reserve tightening, which would normally weaken the dollar. Yet the greenback has not fallen as much as some analysts expected. The benchmark 10-year Treasury yield has climbed, making dollar-denominated assets more attractive to yield-seeking investors and draining momentum from the euro. Meanwhile, the eurozone faces mixed economic data, high energy costs, inflation concerns and the risk of a winter recession, limiting the single currency's upside.
The European Central Bank has signaled a gradual normalization of monetary policy, but its expected pace remains slower than the Fed's, keeping the euro under pressure. From a technical perspective, a break below 1.1700 opens the door to further downside toward the next support around 1.1650. Resistance now sits in the 1.1700-1.1720 zone. Traders are watching upcoming US inflation and employment data, as well as eurozone GDP and PMI readings, for the next directional cue.
