Investing.com -- EUR/USD fell to fresh six-month lows on Tuesday dropping below 1.07 for the first time since late-April, as currency traders awaited comments from several influential policymakers on the Federal Reserve later in the week for further indications on whether the U.S. central bank could raise short-term interest rates next month.
The currency pair traded between 1.0675 and 1.0764 before settling at 1.0725, down 0.25% on the session. The euro has closed down against the dollar in three of the last four and five of the last seven sessions, amid strong hints from the Federal Open Market Committee that it will hike rates at its December meeting. Since surging above 1.14 in mid-October, the euro has lost approximately 6% against its American counterpart.
EUR/USD likely gained support at 1.0519, the low from April 13 and was met with resistance at 1.1496, the high from Oct. 15.
The dollar extended gains against the euro from last Friday when it surged more than 1.25% after the release of arguably the strongest U.S. jobs report of the year. In October, nonfarm payrolls soared by 271,000, considerably above expectations for gains of 190,000. Average hourly wages also shot up by 0.4%, while the U-3 and U-6 unemployment rates each fell to their lowest levels in more than seven years.
The release of the optimistic data came two days after Fed chair Janet Yellen told a Congressional hearing that an interest rate hike will be a "live possibility" at its December FOMC meeting if the economy and labor market demonstrated continued improvement over the next several weeks. Following last week's developments, the CME Group's (O:CME) Fed Watch set the odds of a December rate hike around 70%, up from previous estimates in the low 60s.
On Thursday, a host of FOMC members including Yellen are slated to make appearances at the Federal Reserve's two-day conference on Monetary Policy Implementation and Transmission in the Post-Crisis period. Yellen is scheduled to make the opening remarks on Thursday morning, while Fed chair Stanley Fischer is scheduled to deliver a speech on the transmission of exchange rates to output and inflation on Thursday evening.
The Fed's benchmark Federal Funds Rate has remained at its current level between zero and 0.25% since 2009. Nearly a decade has elapsed since the FOMC has last raised short-term interest rates. A rate hike is viewed as bullish for the dollar, as foreign investors pile into the greenback in an effort to capitalize on higher yields.
Yields on the U.S. 10-Year fell by one basis point on Tuesday to 2.33%, halting a seven-day winning streak.
Investors also await the release of the latest third-quarter GDP figures in the euro zone later this week for further indications on potential growth trends over the next several months. GDP in the euro zone is expected to rise 0.4% on a quarterly basis, after a 0.4% increase in the second quarter. On an annual basis, third quarter GDP is expected to increase by 1.7%, following a gain of 1.5% last quarter.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, soared to a fresh seven-month high on Tuesday at 99.60. Following slight declines in afternoon trading, the index closed at 99.26, up 0.19% on the session.