News report 💱 Forex 🌍 GLOBAL

EUR/USD Slips to 1.1080 as ECB Caution Meets Growing Fed Hike Bets

EUR/USD faces downward pressure below the 100-day SMA at 1.1405, with Rabobank forecasting a move to 1.10 as ECB policy uncertainty and US inflation data drive market sentiment.

🕐 1 min read

3 assets impacted (Forex). Net bias: 1 Bullish, 2 Bearish, 0 Neutral. Strongest signal: EUR/USD ↓ 5/10 (70% confidence).

📊 Affected Assets (3)

EUR/USD
Bearish 🤖 70%
📅 Short-term 🌍 GLOBAL · Explicit

The pair fell to about 1.1080, below the 1.1100 zone and under the 100-day SMA at 1.1405, as ECB's Lane signalled caution while Fed bets for a December hike grew after hotter inflation and Waller's comments. Growing odds of a 50-basis-point Fed hike versus a reluctant ECB point to continued downside pressure. Rabobank targets 1.10 on a 3-month view, and a break below 1.1000 would expose 1.0951 and 1.0733.

Catalysts
  • ▼ US October PPI data due Friday, headline expected +6.6% YoY and core +5.0% YoY
  • ▼ Waller comments supporting a December rate hike and possibly a half-point move
Risk Factors
  • ▲ Lane's hawkish tilt on persistent underlying inflation could modestly support the Euro
  • ▲ Rabobank sees the ECB also likely to tighten in December
USD
Bullish 🤖 70%
📅 Short-term 🌍 US · Explicit

A hotter-than-expected US inflation report and Fed governor Waller's support for a December rate hike, possibly half a point if inflation worsens, have grown bets on Fed tightening. Rising Fed rate expectations typically support the Dollar against the Euro. Friday's PPI data, with headline seen at 6.6% YoY, is the next test.

Catalysts
  • ▲ Growing bets on a 50-basis-point Fed hike in December
  • ▲ US October PPI due Friday, headline expected +6.6% YoY
Risk Factors
  • ▼ If PPI comes in softer than the 6.6%/5.0% expectations, hike bets could fade and trim Dollar gains
EUR
Bearish 🤖 60%
📆 Mid-term 🌍 DE · Explicit

ECB policymaker Lane's cautious stance weighs on the Euro, and Rabobank warns the ECB could prove reluctant to hike beyond December, calling market pricing for 2027 rate rises too aggressive. Uncertainties about a far-right president in France could also weigh on the Euro in coming months, with Rabobank forecasting EUR/USD at 1.10 on a 3-month view.

Catalysts
  • ▼ ECB's Lane signals rate decisions depend on second-round effects from fuel costs
  • ▼ Rabobank sees the ECB reluctant to hike beyond December
Risk Factors
  • ▲ Rabobank notes the ECB is among G10 banks likely to tighten in December
  • ▲ Lane's speech scored a slight hawkish tilt at 6.2/10, modestly supportive for the Euro

🧭 Full analysis of these assets

🎯 Key Takeaways

  • EUR/USD declined to 1.1080 as traders await US October PPI data, expected to show a 6.6% YoY headline increase.
  • Fed Governor Christopher Waller signaled support for a December rate hike, with potential for a 50-basis-point move if inflation data worsens.
  • Rabobank forecasts EUR/USD at 1.10 on a 3-month view, citing concerns over ECB policy reluctance beyond December.
  • Technical indicators show the pair remains bearish below the 100-day SMA at 1.1405, with key support at the 1.1000 level.

📝 Executive Summary

The EUR/USD pair trades near 1.1080 as the European Central Bank maintains a cautious stance on future rate hikes. Conversely, the US Dollar gains momentum as markets price in a potential 50-basis-point Federal Reserve rate increase in December following hawkish comments from Christopher Waller.

❓ FAQ

EUR/USD · Why is EUR/USD falling?

A cautious stance from the ECB, with Philip Lane stressing that rate decisions depend on how fuel-cost inflation spreads to wages, contrasts with growing bets on a Federal Reserve rate hike, including a possible 50-basis-point move, in December.

EUR/USD · What levels matter next?

Resistance sits at 1.1090-1.1100, then 1.1180 and the 100-day SMA at 1.1405. Below 1.1000 support, the next targets are the May 12, 2025 low of 1.0951 and the May 27, 2025 low of 1.0733.

USD · What is driving Dollar strength?

Bets on a Federal Reserve rate hike in December, including a possible half-point move, have grown after a hotter-than-expected US inflation report and comments by Fed governor Christopher Waller.

EUR · What are the risks for the Euro?

Beyond the ECB's caution, Rabobank flags uncertainty about what a far-right president in France could mean for EU cooperation as a factor that could weigh on the Euro in the coming months.