EUR/USD inter-markets: sidelined ahead of a leg lower

EUR/USD is so far extending its consolidative pattern around the psychological 1.1000 handle, with decent support in the 1.0980 region and gains capped around the proximity of 1.1030 for the time being.

Yields in the US money markets keeps falling from recent highs since the release of US Retail Sales on Friday, accelerating the downside during the first half of the week and removing tailwinds from the USD rally.

However, the renewed offered bias around the buck seems to lack of sustainability as expectations of a Fed’s move by year-end continues to bolster the sentiment in USD. According to CME Group’s FedWatch tool, the probability of a rate hike by the Federal Reserve at the December meeting stays firm at 60%, keeping pullbacks in the dollar shallow.

Further gains in EUR/USD should find initial hurdle around the 7-month resistance line at 1.1015 followed by the 1.1060/70 area, where sits the 4-month resistance line. Further north, several moving averages should offer temporary resistance ahead of the critical 200-day sma above 1.1170.