EUR/USD recovers few pips from multi-month low, still deep in the red around mid-1.0700s

EUR/USD plummets to a multi-month low as the USD rallies across the board on Trump enthusiasm.

Surging US bond yields favors the USD bulls and support prospects for further decline for the major.

Diminishing odds for more aggressive ECB rate cuts lend support to the Euro and limit further losses.

The EUR/USD pair comes under intense selling pressure on Wednesday and dives to its lowest level since early July, around the 1.0720-1.0715 region during the Asian session. Spot prices, however, manage to recover a few pips in the last hour and currently trade just above mid-1.0700s, still down 1.50% for the day.

The US Dollar (USD) catches aggressive bids and spikes to a four-month peak amid rising odds of a victory for former President Donald Trump, which, in turn, is seen weighing heavily on the EUR/USD pair. Meanwhile, a Republican sweep could see the launch of potentially inflation-generating tariffs. This, along with deficit-spending concerns and bets for a less aggressive easing by the Federal Reserve (Fed), pushes the US Treasury bond yields sharply higher and favors the USD bulls.

In fact, the yield on the benchmark 10-year US government bond surges over 15 points at 4.44%, hitting its highest level since July 2, and validates the near-term positive outlook for the Greenback. That said, the risk-on impulse – as depicted by a strong bullish sentiment across the global equity markets, holds back the USD bulls from placing fresh bets and helps limit further losses for the EUR/USD pair amid rising bets for a less dovish European Central Bank (ECB).