EUR/USD was flat in New York trade on Thursday after relinquishing a meager overnight rally when the dollar gained on upbeat U.S. jobless claims, and rates markets, options and technicals were still signaling more losses to come even after the September jobs report.
Euro zone and U.S. short-term rates markets indicate investors still expect the Fed to be more aggressive with rate hikes than the ECB.
Eurodollar and euribor pricing out to early 2027 project the Fed hiking by roughly 180 bps and the ECB about 80 bps, a differential that should prevent substantial EUR/USD rallies.
EUR/USD risk reversals EUR1MRR=FN indicate vol premiums for puts still exceed those for calls, though not by an excessive amount, which indicates EUR/USD may grind lower.
Monthly RSI indicates longer-term downward momentum is in place and October's monthly inverted hammer implies EUR/USD bears have the advantage.
EUR/USD longs likely need a big downside surprise in the September jobs report to stoke doubts on the downside scenario.
An upbeat or as-expected report is likely drive EUR/USD below 1.1500 barriers and 50% Fib of the 1.0636-1.2349 rally.
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