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.
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.
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.
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.
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.
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.
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.
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.
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.