EUR/USD finds support, but remains capped by 1.1100

EUR/USD dropped to fresh 2-month lows on Tuesday, as the dollar continued to strengthen across the board, having completely shrugged off a disappointing nonfarm payrolls reading.

With trading volume returning to normal levels after the US holiday on Monday, EUR/USD extended losses, pulling back from levels above 1.1200 scored on Friday to below 1.1100. EUR/USD hit its lowest level in over 2 months at 1.1070 and it was last trading around 1.1089, recording a 1.95% loss on the day.

The dollar is among the best performers in the FX space, supported by expectations that the Fed will remain in its tightening path, with another rate hike expected before the year-end.

On the data front, Germany ZEW survey for October showed that sentiment improved, with the index up to 6.2 from previous 0.5. For the EU, economic sentiment improved from 5.4 to 12.3. In the US, labor market conditions index is on tap.

EUR/USD levels to watch

In terms of technical levels, immediate supports are seen at  1.1070 (Aug 9 low), 1.1045 (Aug 5 low) and 1.1000 (psychological level). On the other hand, resistances line up at 1.1169 (200-day SMA), 1.1203 (50-day SMA) and 1.1250/58 (Sep 30 high/Sep 27 high).