EUR/USD bears taking back control to 100-hour SMA

• EUR/USD: correcting the bid to 100-hour SMA.
• EUR/USD: downside opened on Fed hike expectations.

EUR/USD is back off the highs for the session as the dollar bounces back off session lows down at 92.729. Currently, EUR/USD is trading at 1.1887, up 0.30% on the day, having posted a daily high at 1.1932 and low at 1.1809.  

EUR/USD was lower following the weaker than expected inflation data from the Eurozone (+1.5% y/y versus +1.6% expected) overnight. "EUR softness reflects the perhaps weak commitment and positioning as spot neared the 1.20 level as much as anything else, however," analysts at Scotiabank argued who remain cautiously positive on the EUR.

US curve flattening goes on and will likely continue - Danske Bank

US data cements expectations for a hike in December

For the US session, the greenback fell back to a 3-day low after The New York Times reported that the White House is planning to replace Secretary of State Tillerson with CIA Chief Pompeo. As far as key data went, the US personal income and spending report showed that the PCE price index was in line with expectations. "This should help cement expectations for a hike in December, but with little over one rate rise priced in for 2018, we feel markets may be underestimating the Fed's plans. Alongside rising inflation, we're looking for growth of around 3% next year. Throw in the hawkish rotation of regional Fed voters, which will see two dovish voters (Kashkari and Evans) replaced with two hawks (Williams and Mester), and the fact policymakers are paying increasingly close attention to rich asset prices, and we think the Fed will hike rates three times next year," analysts at ING explained.

EUR/USD levels

"We thought that pressure on the EUR was abating in the low 1.18s as trading got underway yesterday and while the EUR has stayed relatively soft, the market is showing some signs again that demand is emerging to prop up the EUR on dips," analysts at Scotiabank noted. " Spot is just about holding the uptrend from early Nov on the short-term chart and we think 1.1810/20 should provide some underpinning for the EUR in the short run, " the analysts added while analysts at Commerzbank argue that a Fibonacci retracement at 1.1976 is regarded as the last defence for the 1.2092 September high.