For a second straight day, the euro is struggling to return to the 1.1700 level. Disappointing German and French data squelched any attempt made by the currency to hold on to the 1.1700 figure. Producer Prices in Germany, Europe's largest economy, increased the most in six months in October as energy costs rose. A 30 percent increase in oil costs this year is fueling German inflation. Additionally, the French trade deficit rose to 2227M, as September revenue receipts fell by 700M euros. On the other hand the French economy expanded at the fastest pace in more than year, driven by a 0.7 percent in consumer spending which may lend further credence to the euro longs argument that ECB rate hike is imminent.

Though one again down for the count,  euro selling appears to have exhausted itself for the time being and the unit should find support around the 1.1630 level. The currency may also be fundamentally supported as economists predict that the ECB will increase interest rates in December. With no additional eco data for the rest of the day, trading may remain choppy as we go in to the week-end. On Monday, traders will be focused on Italian Industrial figures, which rose 12.9 percent in August and the euro-zone trade balance, which is expected to rise 3.6M to 1.0M. The spread between the benchmark bonds, the 10-year German bund and the 10-year U.S. Note, is at 101 bps and tightening suggesting that the euro may finally be ready for an up week as we go into the Thanksgiving holiday.

Boris Schlossberg is a Senior Currency Strategist at FXCM.