EUR/USD rises to levels near 0.9800 as US dollar weakens

• The euro rebounds from the 0.9740 zone to approach 0.9800.
• The dollar lost steam after weak data on services activity.
• EUR/USD is seen at 0.93 over 12 months — Danske Bank.

The euro has trimmed losses in the American session on Thursday, bouncing from the 0.9740 area to hit 0.9795. However, the pair remains negative on the daily chart and trades down nearly 3% on the week.

The dollar falls after the disappointing US data

Business activity in the US services sector expanded at a slower-than-expected pace in October, according to the ISM PMI, which has dropped to 54.4 from 56.7 in September, up from 55, 5 expected by the market.

In addition, the employment indicator has fallen to 49.1, entering levels consistent with a contraction, from 53.0 the previous month, while the new orders sub-index fell to 56.5 from 60.6, revealing the uncertainty in economic conditions.

These figures have moderately weighed on a so far strong dollar, which has risen across the board following the Fed’s monetary policy decision on Wednesday.

The Fed raised rates 0.75% for the fourth time in a row, as widely expected, and suggested interest rates could reach higher levels than markets expected. Hawkish comments from Fed Chairman Powell dampened expectations of a dovish turn in December and boosted the dollar and US Treasuries.

EUR/USD is seen at 0.9300 in 12 months — Danske Bank

Danske Bank FX analysts see the pair on the defensive amid the Fed’s hawkish stance, targeting a 0.93 target: “Markets took the FOMC statement dovishly, but the move moderated during the press conference and the EUR/USD fell below pre-meeting levels, while the 2-year Treasury yield rose about 6 basis points. we keep our forecast for EUR/USD at 0.93 in 12 months”.

Technical levels to watch