EUR/USD hits one-month lows, closer to 1.18 mark ahead of Yellen
|The EUR/USD pair extended previous session's German election result-led slide and tumbled to its lowest level since August 25, closer to the 1.1800 handle.
The pair maintained it’s offered tone for the second consecutive session and has finally broken down of a four week old trading range. A modest pickup in the US Dollar demand, amid growing prospects of additional Fed rate hike action by the end of this year, has been one of the key factors exerting some fresh selling pressure.
Meanwhile, the shared currency was also being weighed down by Monday's disappointing release of the German IFO business climate index for September and the ECB President Mario Draghi's comments on uncertain outlook for inflation in the Euro-zone.
• ECB's Draghi: Downside risks related to FX markets continue to exist
Against the backdrop of a setback from the German election, Draghi's cautious remarks further dented already weaker sentiment surrounding the common currency and helped negate escalating geopolitical tensions over the Korean peninsula.
• EUR: German elections has provided a reality check on EZ political risks - ING
Later during the day, the Fed Chair Janet Yellen's speech on “Inflation, Uncertainty, and Monetary Policy” would be closely scrutinized for any fresh hints over a possible rate hike move in December, which would eventually provide fresh impetus for the pair's near-term trajectory.
• EUR/USD faces risks of deeper pullback – UOB
Technical levels to watch
A follow through weakness below the 1.1800 handle might continue to drag the pair towards testing its next support near 1.1760-55 area before eventually dropping to 1.1720 horizontal level.
On the upside, any recovery attempts beyond 1.1830-35 area could get extended, but now seems to be capped near 1.1880-85 strong horizontal support turned resistance.
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