EUR/USD down nearly 100-pips on the week as greenback strength persists

Despite a recovery attempt in the US afternoon, the EUR/USD pair remains on track to close the fifth straight day in the negative territory, bringing the total weekly loss to nearly 100-pips. As of writing, the pair was trading at 1.1765, down 0.07% on the day.

The pair's price action had been dominated by the greenback's strength throughout the week as the macroeconomic data releases from the euro area had been largely ignored by the market participants. In fact, the Euro Index fluctuated in a tight range between 95.20 and 94.60.

Ahead of next week's important Fed meeting, the US Dollar Index gained traction as investors continued to price the rate hike expectations as well as a hawkish 'dot plot,' which shows the 2018 rate hike projections of every individual member of the FOMC. Today's upbeat employment report ramped up the possibility of the Fed looking to hike rate three more times next year.

The nonfarm employment payrolls in the United States increased by 228K in November following October's robust 244K rise. Furthermore, the unemployment rate remained unchanged at 4.1%. Although the wage inflation failed to meet the market consensus of 0.3% on a monthly basis as it came in at 0.2%, it was good enough to keep the DXY in the positive territory. As of writing, the index was at 93.90, up 0.15% on the day. "Although the earnings growth disappointed, the market will not be deterred from expecting the Fed to still hike rates 25 bp next week.  Headline inflation converges to core inflation and core inflation is understood to be driven by wage growth," BBH analysts explained.

• Disappointing US wage growth unlikely to worry the Fed - ING

Technical outlook

Valeria Bednarik, American Chief Analyst at FXStreet, writes, "in the daily chart, the potential downward is stronger, with the price below its 20 and 100 SMAs and indicators heading south almost vertically within negative territory. More relevant, the pair broke below the 61.8% retracement of its late November bullish run the main resistance now at 1.1800. If somehow the pair manages to recover above it, the next stop will be the 1.1860/70 region, en route to 1.1930.  The main support, on the other hand, is 1.1712, November 21st low, with a break below it exposing 1.1660 and 1.1600."