EUR/USD remains under pressure as dollar strength threatens a drop to 1.1000

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EUR/USD bears target the 1.1000 level

U.S. producer inflation could reinforce the bearish trend

Today's key macroeconomic event will be the release of the U.S. Producer Price Index for October. Economists expect headline PPI to rise 0.4% month over month, following a 1.3% surge in September, while the core figure is forecast to slow to 0.3%. Higher readings could increase pressure on the euro by confirming persistent inflationary risks at the producer level.

Developments in the bond market further strengthen the dollar's position. The yield on 10-year U.S. Treasuries rose to approximately 5.12–5.13% on November 13, while the two-year yield remains around 4.85–4.86% after a sharp increase in the previous session. The yield on 10-year German government bonds also climbed to approximately 3.35–3.38%, but the spread between U.S. and German bonds remains substantial at around 175–180 basis points.

This maintains the attractiveness of dollar-denominated instruments and makes a recovery in the euro more difficult. The dollar also benefits from increased stock market volatility and persistent tensions in the Middle East. A potential rise in energy prices could fuel inflation in the U.S., complicate the Fed's task, and simultaneously increase costs for European industry.

Eurozone growth remains uneven ahead of key data

Today's revised third-quarter eurozone GDP figures and preliminary employment data are important for the euro. Eurostat's initial estimate showed economic growth of 0.4% quarter over quarter and 1.3% year over year, although the recovery remains uneven.

The French economy contracted by 0.1%, while Italy recorded zero quarterly growth. Stronger results in some countries failed to fully offset weakness in the region's major industrial centers. Additional attention is focused on the eurozone's September trade balance, as changes in energy costs and external demand directly affect demand for the European currency.

Regarding ECB monetary policy, the market sees the possibility of another rate hike in December, but the central bank's options are constrained by slowing economic activity. Even relatively strong European data may provide only temporary support for the euro if U.S. economic indicators continue to point to the need for a more prolonged period of Fed monetary tightening.

Resistance at 1.1070 keeps sellers in control

The EUR/USD outlook remains negative, as confirmed by continued selling interest on pullbacks. The nearest resistance currently stands around 1.1070, and selling from this level could contribute to a break below support at 1.1050 and a decline toward 1.1030–1.1000, where short positions may be closed to take profits. A break above the current resistance, as noted in EUR/USD breaks below 1.1110 as U.S. inflation strengthens the dollar, would lead to a rise toward 1.1090–1.1110.

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