EUR/USD Price Forecast: Sees fresh downside below 1.1100

The Euro (EUR) is experiencing fresh downside pressure, trading below 1.1100 against the US Dollar (USD) as of Wednesday morning in Europe. The strength of the US Dollar is attributed to concerns over the Federal Reserve's (Fed) potential for a significant interest rate hike during their December policy meeting, following a strong Consumer Price Index (CPI) data release for October.

The US Dollar Index (DXY), which measures the Dollar's value against six major currencies, is nearing a 12-day high of 102.41, posted on Tuesday. TD Securities suggests that the unexpectedly high US CPI data almost guarantees a December Fed rate increase. Following the recent Fed Chair Jerome Waller's speech, the debate has shifted to whether the Federal Open Market Committee (FOMC) will adopt a 25 or 50 basis points rate increase in December.

TD Securities believes the Federal Reserve will likely opt for a 25 basis points hike, with the risk of a further 50 basis points hike in January. Currently, the EUR/USD pair is trading at 1.1167, maintaining a bearish near-term outlook as it remains below the 20-day Exponential Moving Average (EMA) of 1.1202. The Relative Strength Index (RSI) is at 43, indicating only modest negative momentum without being oversold.

The 20-day EMA at 1.1202 and the 17-month low at 1.1104 are the key resistance and support levels, respectively. A break below the 1.1104 level could expose the pair to the psychological level of 1.1000.