Euro Slips to 1.1220 as Dollar Rebounds From DXY 101.20 — 1.1310 Upside Needs a Soft Payrolls Print

The euro’s post-election pop against the dollar lasted barely a day. EUR/USD traded at 1.1220 in the U.S. session on Thursday, November 5, down 0.10% from Wednesday’s close of 1.1235. The pair hit an intraday high between 1.1268 and 1.1274 in the European morning before rolling over, and printed a session low of 1.1211. The European Central Bank fixed its official reference rate at 1.1224, down 0.0043 from Wednesday’s 1.1267, a 0.4% drop between the two daily fixings.

The week’s path tells the story in four prints. The ECB reference rate stood at 1.1216 on Monday, fell to 1.1179 on Tuesday as U.S. election results came in, jumped to 1.1267 on Wednesday as the dollar slid to a five-week low, then gave back most of that gain on Thursday. EUR/USD briefly touched 1.13 on Wednesday, its highest level since October, before sellers capped the move.

Step back and the euro has had a rough year. EUR/USD started 2026 at 1.1714 and now trades 4.2% lower. It is down 2.82% over 12 months and 0.34% over the past month. The 2026 high of 1.2067 sits 7.5% above the current price, while the year’s low at 1.1120 is just 0.9% below. The 2026 average through October was 1.1568, which means the pair is trading in the bottom fifth of its yearly range. November’s low so far is 1.1152.

The thesis for this forecast is straightforward. EUR/USD is caught between two central banks that are both hiking, which neutralizes the rate-differential argument that normally drives the pair. With policy divergence off the table, the pair is trading on politics and data, and Thursday showed both cut against the euro. Initial jobless claims fell to 189,000, matching a 57-year low, and three Federal Reserve officials delivered hawkish messages, reviving the dollar after its election slide. On the euro side, France’s National Assembly unanimously rejected the 2027 budget the night before a nationwide strike, keeping the French-German bond spread near crisis levels. The election-driven dollar weakness was real, but it ran into a wall at 1.1270. Until Friday’s U.S. payrolls report breaks the stalemate, EUR/USD is pinned in a 1.1150 to 1.1310 range with a mild bearish tilt.

The Week in Four Fixings: From 1.1179 to 1.1267 and Back

The euro’s week started with a slide. The ECB reference rate fell from 1.1216 on Monday to 1.1179 on Tuesday as markets braced for U.S. midterm results. The euro had already dipped below its October 14 low the previous week before recovering after ECB President Christine Lagarde said a December hike remained likely. That October low marked the bottom of a bruising month in which energy prices, French political turmoil and a strong dollar all hit the single currency.

Wednesday flipped the script. Democrats won both chambers of Congress, the dollar fell to a five-week low, and EUR/USD ripped to 1.13. Treasury yields fell, with the 10-year down 7.4 basis points to 4.888% and the 2-year down 5 basis points to 4.581%. Crude oil collapsed more than 8%, which helped the euro twice over: it cut U.S. inflation risk, which weighed on the dollar, and it improved Europe’s terms of trade as an energy importer. The ECB fixed at 1.1267, up 0.0088 from Tuesday.

Thursday’s European session started with follow-through. EUR/USD traded at 1.1254 early and hit 1.1258 as traders positioned for a break above 1.1269 toward 1.1310. The dollar index fell as low as 101.20 during the Asian session. For a few hours the bullish case looked intact.

Then the data hit. U.S. initial jobless claims came in at 189,000 at 8:30 a.m. ET, well below the 196,000 consensus. Third-quarter productivity grew at a 3.6% annualized pace against a 2.8% forecast. Shortly after, Cleveland Fed President Beth Hammack and Richmond Fed President Thomas Barkin both signaled support for continued rate hikes. The dollar index climbed back to 101.51, and EUR/USD slid through 1.1240, 1.1230 and into the 1.1220 area.

The equity rout added a second layer. As the Nasdaq Composite dropped 4.3% into correction and the S&P 500 fell 3.14%, safe-haven demand for the dollar picked up at the margin. EUR/USD did not crash, but it lost the bid that had carried it toward 1.13.

The pattern matters for the forecast. The euro rallied on U.S. political news and gave the gains back on U.S. economic data. Neither move had much to do with Europe itself. That tells you EUR/USD is being driven from the dollar side, and the dollar side just turned firmer.

The Dollar’s Election Slide Hits a Floor at DXY 101.20

The dollar’s post-election weakness was sharp but shallow. The U.S. dollar index closed Wednesday at 101.48, down 0.4%, its weakest level since September 30. It extended the slide to 101.20 during Thursday’s Asian session before bouncing to 101.50 by the European afternoon and 101.51 in New York, a 0.04% gain on the day. A 30-point round trip in the DXY is not a trend change; it is a test that the dollar passed.

The reasons for Wednesday’s slide were clear. A Democratic Congress means divided government starting in January, which caps the odds of new tariff escalation and large fiscal packages. Both had supported the dollar through 2026. Markets also read the result as lowering the risk of further escalation in the US-Israeli war with Iran, since Congress can now constrain military options. That pushed oil lower and reduced the inflation premium that had been propping up U.S. yields.

The Senate result added a technical twist. Democratic control blocks efforts to reshape the Federal Reserve Board, since any new governor now needs Democratic approval. That removes one source of uncertainty around central-bank independence, which is dollar-positive in theory. Markets focused on the growth and fiscal story instead.

Why did the slide stop at 101.20? Because the macro case for the dollar did not change. The U.S. economy grew at a 3.4% annualized pace in the third quarter, according to the Bureau of Economic Analysis advance estimate. S&P 500 earnings are up nearly 40% from a year ago. September CPI ran at 3.7%. The Fed is still hiking. A resilient U.S. economy with at least one more rate hike ahead limits how far a political shock can push the dollar down.

Cross-currency moves show where the dollar lost and where it held. USD/JPY drifted lower to 158.25 after hawkish Bank of Japan minutes showed members agreed to keep raising rates. GBP/USD traded near 1.3485 during Asian hours ahead of the Bank of England decision. EUR/USD was the weakest of the three on Thursday, which points to euro-specific pressure on top of the dollar rebound.

For the forecast, DXY 101.20 is now the floor to watch. A break below it would signal the election shock has legs and likely push EUR/USD back above 1.1270. A move above 101.80 would put 1.1150 in play for the euro.

U.S. Data Fights Back: Claims at 189,000 and Productivity at 3.6%

Thursday’s U.S. data gave the dollar exactly what it needed. Initial jobless claims fell 6,000 to a seasonally adjusted 189,000 for the week ended October 31, beating the 196,000 consensus. That matches the level reached in mid-July, the lowest since 1969. The prior week was revised up to 195,000 from 194,000. The four-week moving average declined 2,250 to 194,750.

Continuing claims moved the other way, rising 23,000 to 1.718 million in the week ended October 24. That number, a proxy for how quickly laid-off workers find new jobs, is still low but edging higher. The combination fits what economists describe as a low-hire, low-fire labor market: employers are not cutting staff, but they are not adding many either. The insured unemployment rate held at 1.1%.

Productivity was the bigger surprise. Nonfarm productivity rose at a 3.6% annualized rate in the third quarter, well above the 2.8% forecast and accelerating from an upwardly revised 2.1% in the second quarter. Output increased 3.7% while hours worked rose only 0.1%. Unit labor costs fell at a 0.7% annualized rate, their first decline since the second quarter of 2025, against expectations for a 0.6% increase. Hourly compensation grew 2.9%.

That productivity print cuts both ways for the dollar. Falling unit labor costs ease the wage-driven inflation fear that has pushed the Fed toward hikes, which in isolation would be dollar-negative. But strong productivity also signals an economy that can grow fast without overheating, which supports corporate earnings, U.S. asset demand and the case for a strong currency. Markets took the second reading.

Layoff data reinforced the picture. Employers announced 43,994 job cuts in October, down 71% from a year earlier and the lowest monthly total since 2023. Hiring plans totaled 444,692, most of it seasonal work. ADP counted 86,000 private jobs in October, ahead of the 69,000 to 75,000 expected.

For EUR/USD, the data matter because they set up Friday. The consensus for October payrolls sits at 65,000 with unemployment at 4.2%. Every early indicator now points to a firmer print. If Friday confirms that, the dollar rebound has room to run, and the euro loses the last of its election gains.

Fed Hawks Circle: Hammack, Barkin and Logan Push for More Hikes

Three Fed officials delivered the same message in the same 24 hours: the hiking cycle is not over. Cleveland Fed President Beth Hammack said Thursday that monetary policy needs to move to a restrictive stance because inflation is too high and moving in the wrong direction. She argued a gradual rate-hike path is the least disruptive way to get there. Richmond Fed President Thomas Barkin said he does not expect inflation to accelerate but does not see it falling either, calling inflation the Fed’s most important risk and saying gradual tightening makes sense. Dallas Fed President Lorie Logan went further, saying the Fed needs at least two more quarter-point hikes and that skipping a meeting does not change the intended destination.

Hammack’s comments carry extra weight because she dissented in favor of a hike at the October 28 meeting, along with Governor Lisa Cook. The Fed held its benchmark at 3.75% to 4.00% that day after raising rates by a quarter point in September. Two dissents for a hike signal that the hawkish wing has momentum.

Market pricing has softened only a little. Fed funds futures price a 74.5% chance of a December hike of at least 25 basis points, down from 79.9% a week earlier. The slide reflects the election and the oil collapse, but three-in-four odds still make a hike the base case. Logan’s call for two more hikes points to a terminal rate of 4.25% to 4.50%, above where markets are pricing it.

The euro’s problem is that the ECB is also hiking, which means the rate differential is not moving in the euro’s favor. Fed funds sit 150 basis points above the ECB deposit rate of 2.50%. If both central banks hike in December by 25 basis points, the gap stays at 150. If the Fed hikes twice more as Logan suggests and the ECB stops after one, the gap widens to 175.

In the bond market, the spread is similar. The U.S. 10-year Treasury yield fell to 4.831% on Thursday, while euro-area AAA-rated 10-year yields stand at 3.35%. That 148-basis-point gap pays investors to hold dollars over euros, and it explains why every euro rally this year has stalled.

For the forecast, the Fed’s hawkish chorus caps EUR/USD. A soft payrolls print could pull December hike odds toward 50% and give the euro room. Anything near consensus keeps the dollar supported.

The ECB Hikes Too: 4.0% Inflation and an 11.1% Producer Price Shock

The ECB is in its own tightening cycle, which would normally support the euro. The central bank kept its deposit rate at 2.50% at its October meeting after two hikes since the Iran war pushed energy prices higher. Lagarde said a third hike was discussed before the Governing Council unanimously chose to hold, and she said another hike in December remains likely. EUR/USD rallied while she took questions.

Inflation data back her up. Euro-area flash HICP inflation rose to 4.0% in October from 3.8% in September, a fresh three-year high, matching the 4.0% consensus. That is double the ECB’s 2% target and the highest reading since the 2023 energy shock. The producer price picture is worse. Eurozone PPI rose 2.5% month over month in September, accelerating from 2.0% in August. The annual rate jumped to 11.1% from 8.3%.

An 11.1% annual producer-price increase is a warning sign for consumer inflation in the months ahead. Producer prices feed into consumer prices with a lag of several months, which means headline HICP could keep climbing into early 2027 even if oil stabilizes. That keeps the ECB under pressure to hike again in December and possibly beyond.

So why is the euro not rallying? Because ECB hikes are already priced, and because the market sees them as defensive rather than a sign of economic strength. The Fed is hiking into 3.4% GDP growth and near-record-low jobless claims. The ECB is hiking into slowing activity and a fiscal crisis in its second-largest economy. Currency markets reward central banks that tighten from strength and discount those that tighten under duress.

The policy communication also matters. ECB Executive Board member Philip Lane spoke Wednesday at the San Francisco Fed’s research symposium on AI and the economy. Lagarde’s blog this week focused on climate risk and energy-system flexibility. Neither offered fresh guidance on December, which leaves the October press conference as the latest word.

Upcoming euro data could shift the picture. September retail sales arrive Friday at 10:00 a.m. CET, with consensus at 0.0% month over month after a 0.1% gain previously, and 0.5% year over year after 0.6%. A weak print would undercut the ECB’s case for hiking further and pressure the euro. A firm print would add support but is unlikely to move the pair much against Friday’s U.S. payrolls.

Eurozone Growth Wobbles: PMI Slides to 51.7 as France Falls to 46.6

The euro-area economy is slowing just as the ECB tightens. The final October composite purchasing managers’ index fell to 51.7 from 53.1 in September, a four-month low and slightly below the 51.9 flash estimate. The composite posted its first monthly decline since May. Services slipped to 51.4 from 53.0, also below the 51.7 flash. Manufacturing held up better at 52.7, though it eased from 52.9. All three readings remain above the 50 line that separates expansion from contraction, but the direction is clear.

The national breakdown shows a split economy. Germany is holding up: its October services PMI was revised higher to 52.5 from 51.7, and its composite rose to 53.4 from 52.8. France is collapsing. Its composite PMI fell to 46.6 in October from 51.1 in September, and services dropped to 46.2 from 51.2. A five-point drop in a single month is the kind of move usually seen during a shock, and France’s shock is political.

Construction is weakening across the bloc, with the sector’s downturn deepening in October. The euro-area jobless rate held steady at a level that is now the highest in more than two and a half years.

There is a bright spot. Euro-area GDP grew 0.4% in the third quarter, beating expectations. That growth rate, roughly a 1.6% annualized pace, compares poorly with the U.S. 3.4% but is solid by European standards. The question is whether the fourth quarter holds up as PMIs slide.

The growth picture matters for EUR/USD because it shapes how markets read ECB hikes. A central bank that raises rates into a slowing economy risks a policy mistake, and currency traders tend to sell the currency of an economy facing that risk. Every soft PMI makes ECB hikes look less like a show of strength and more like a reluctant response to imported energy inflation.

The contrast with the U.S. is stark. The ISM services index in the U.S. slipped only to 54.5 from 54.9 in October, with new orders at 55.9 and employment rising to 51.4. The U.S. is expanding faster across services and manufacturing. That growth gap is one of the main reasons the euro trades 4.2% lower for the year.

The November flash PMI, due later this month, is the next growth checkpoint. A further slide in the composite toward 50 would increase pressure on the euro and on the ECB’s hiking path.

France in Crisis: Budget Rejected, Nationwide Strikes, 178-Basis-Point Spread

France is the euro’s biggest internal problem. On Wednesday evening, the National Assembly unanimously rejected the government’s 2027 budget, which sought €54 billion in spending cuts to regain the trust of bond investors. Every party voted against it. With no majority in a hung parliament since the 2024 elections, the government of Prime Minister Élisabeth Borne has no clear path to pass a budget through normal votes.

The bill now moves to the Senate, with a vote scheduled for December 9. A parliamentary committee will then try to broker a compromise before the legislation returns to the National Assembly. If that fails, the government is highly likely to invoke special constitutional powers to force the budget through without a vote, which would trigger no-confidence motions and could topple the government. Passing a budget by ordinance, the other option, has never been done in the Fifth Republic.

The streets are adding pressure. Hundreds of thousands of people joined demonstrations across France on Thursday in a nationwide strike involving trade unions, students and workers from multiple sectors. The government deployed more than 70,000 police and gendarmes. The national rail operator canceled one in 10 high-speed trains, and at least 25 Paris metro stations were closed. Dockworkers called a strike. Unions said the budget targets the most vulnerable by freezing social benefits.

Bond markets have been pricing this risk for weeks. The spread between French and German 10-year government bond yields reached 178 basis points in October, up from 85 basis points at the start of September. Levels like that have not been approached since the euro-area debt crisis in 2011. France’s budget deficit measured 5.1% of GDP in 2025, and the government’s own deficit targets are now widely seen as unreachable.

For EUR/USD, the French crisis matters in three ways. It raises fragmentation risk within the euro area, which investors price as a discount on the single currency. It complicates the ECB’s job, since hiking rates raises borrowing costs for a sovereign already under stress. And it drags on growth, as France’s 46.6 composite PMI shows.

The ECB has tools to contain spread blowouts, including its Transmission Protection Instrument, but activating it would require conditions France may not meet. That uncertainty keeps a political risk premium on the euro that will not fade until the budget passes.

Oil, Iran and Europe’s Terms of Trade: Why Cheaper Crude Is Euro-Positive

Energy prices have been the euro’s biggest external headwind in 2026. The Iran war pushed crude sharply higher, and Europe, as a large energy importer, paid the bill in two ways: higher inflation that forced the ECB to hike, and a worse trade balance that weighed on the currency. That is why Wednesday’s oil collapse gave EUR/USD such a lift.

Both crude benchmarks fell more than 8% on Wednesday to settle at their lowest since August 31. Brent extended the slide overnight to $93.82 and WTI to $86.92. Markets bet a Democratic Congress, able to constrain military options, gives the administration more incentive to seek a deal with Iran. Vice President JD Vance posted that the war was the reason his party lost the midterms, which added to hopes for a resolution.

Thursday’s bounce took some of that hope away. Brent rose 2.31% to $96.81 and WTI climbed 1.83% to $89.73 as uncertainty over whether a deal will actually happen capped the selloff. EUR/USD’s slide on Thursday tracked the oil rebound closely. When crude rose, the euro fell.

The mechanism is straightforward. Every $10 move in Brent shifts Europe’s annual energy import bill by tens of billions of euros. Cheaper oil means fewer euros flowing out to pay for energy, which supports the currency. It also lowers euro-area inflation, which could reduce the need for further ECB hikes. That second effect is mixed for the currency, but the trade-balance effect dominates in the short run.

Natural gas matters too. European gas prices have tracked oil through the conflict, and any easing in Middle East tensions would reduce pressure on European utilities, industrial producers and households. The ECB’s PPI reading of 11.1% year over year reflects energy costs passing through supply chains.

The forecast implication is clear. A credible path to resolving the Iran conflict would be the single biggest positive for the euro, likely pushing EUR/USD through 1.1310 and toward 1.1400. Renewed escalation would send oil back above $100 Brent and push the pair toward its 1.1120 yearly low. The pair is effectively a short-oil trade right now, and Thursday’s bounce in crude worked against it.

The Crosses and Risk Sentiment: Sterling Gets a Hike, the Euro Gets Squeezed

The euro crosses show where Thursday’s weakness came from. The ECB reference rates put EUR/GBP at 0.83393, EUR/JPY at 177.85 and EUR/CHF at 0.9180. The euro lost ground against the Swiss franc and the yen as risk appetite soured, and held roughly flat against sterling despite the Bank of England’s move.

The Bank of England voted 8-1 on Thursday to raise its key rate by a quarter point to 4%, its first hike since 2023. One member dissented in favor of a larger move. The bank sees inflation rising to 5% by mid-2027. Governor Andrew Bailey said the hike should not be seen as the first in an inevitable sequence, but that unless the Middle East conflict is resolved it is unlikely to be the last. He also said he did not think the bank had moved too late. Sterling found support, and GBP/USD traded near 1.3485 in Asian hours before the decision.

With the BoE at 4%, the ECB at 2.50% and the Fed at 3.75% to 4.00%, the euro now carries the lowest policy rate of the three major Western central banks by a wide margin. That carry disadvantage keeps pressure on EUR/GBP and EUR/USD alike.

The yen and franc picked up haven flows. USD/JPY fell to 158.25 on hawkish Bank of Japan minutes and intervention risk, and EUR/JPY eased with it. The Swiss franc gained as the equity selloff spread. EUR/CHF at 0.9180 sits near levels where Swiss National Bank intervention has historically been discussed.

Risk sentiment hit the euro indirectly. The Nasdaq’s 4.3% plunge into correction and the 11% collapse in the semiconductor index pushed the VIX as high as 23.46. European equities held up better. Germany’s DAX traded at 26,599.23, down just 0.09%, insulated from the AI chip selloff because it has little exposure to U.S. semiconductors. But in risk-off episodes, the euro typically underperforms the dollar, franc and yen as investors move toward the deepest and safest markets.

Gold’s rally to $4,121.74 confirms the haven bid. Bullion rose 1.48% while the euro slipped, a sign that investors seeking safety chose hard assets and the dollar over European currency exposure.

For the forecast, the crosses point to a euro that is weak on both carry and haven grounds. That limits upside even when the dollar softens.

The Technical Map: 1.1270 Resistance, 1.1150 Support, 1.1120 the Line

The EUR/USD chart has a clear structure. Resistance sits at 1.1269 to 1.1274, the zone where Thursday’s rally stalled and the level that technical traders identified as the trigger for a move toward 1.1310. Wednesday’s spike to 1.13 marks the next layer and the highest level since October. A daily close above 1.1310 would break the pattern of lower highs and open a path toward 1.1400.

Support starts at 1.1211, Thursday’s session low. Below that, 1.1179 is Tuesday’s ECB reference fixing and the pre-election level. November’s low of 1.1152 is the next floor. The 2026 low at 1.1120 is the critical line. A close below it would break the yearly range and mark a fresh low not seen since 2025, opening the way toward 1.1000.

Some traders watch 1.1214, the 2024 high, as a pivot. EUR/USD reclaimed it this week, and holding above it keeps the recovery from the October lows intact. Thursday’s low at 1.1211 sat just three pips beneath it, a sign of how important the level has become.

The broader trend is bearish. EUR/USD has fallen from a 2026 high of 1.2067 to 1.1220, a 7% drop. The pair sits below its 2026 average of 1.1568, and the ECB’s 12-month reference range runs from 1.1130 to 1.1974. The current price is near the bottom of every range that matters.

Momentum shifted on Thursday. Wednesday’s move to 1.13 had the pair breaking out of a short-term downtrend, and early Thursday price action pointed to a continuation. The rejection at 1.1270 and the slide back to 1.1220 turned that breakout into a potential false break, which is often a bearish signal. If the pair closes Thursday below 1.1230, the 1.1270 to 1.1300 zone becomes a lower high in a descending pattern.

The range is tight. From 1.1150 support to 1.1310 resistance is 160 pips, or 1.4% of the price. Friday’s payrolls report has historically moved EUR/USD 50 to 100 pips on a meaningful surprise, which is enough to test either end. A break of 1.1310 or 1.1150 would likely set the direction for the rest of November.

Forecast Scenarios: Friday’s Payrolls and Next Week’s Inflation Decide the Range

The next three sessions carry the catalysts. Friday brings U.S. October payrolls at 8:30 a.m. ET, with consensus at 65,000 and unemployment at 4.2%, and euro-area September retail sales at 10:00 a.m. CET. Tuesday, November 10, brings U.S. October CPI, expected at 3.7% year over year and 0.2% month over month. The French budget’s December 9 Senate vote sets a longer timeline for euro political risk.

The bearish scenario starts with a hot payrolls print. Payrolls above 100,000, unemployment below 4.2% or firming wage growth would push December hike odds back toward 90%, lift the 2-year Treasury yield above 4.60% and strengthen the dollar. EUR/USD would likely fall through 1.1179 and test 1.1152, with a break of 1.1120 opening 1.1000. A weak euro retail sales number would add to the pressure. Thursday’s 189,000 jobless claims print and 86,000 ADP reading make this scenario more likely than it looked on Wednesday.

The base case is consolidation. Payrolls near the 65,000 consensus would keep hike odds near 75% and leave EUR/USD in a 1.1150 to 1.1270 range through next week’s CPI. That range respects Wednesday’s breakout zone and the November low. The pair would drift with oil prices and French headlines in the meantime.

The bullish scenario needs a soft U.S. report. Payrolls below 40,000 or unemployment rising to 4.3% would cut December hike odds toward 50%, extend the bond rally and push the dollar index below 101.20. EUR/USD would clear 1.1274 and target 1.1310, with a daily close above that opening 1.1400. A credible Iran ceasefire would add fuel. The upside target of 1.1400 represents a 1.6% gain from 1.1220.

Probabilities lean bearish. Early U.S. labor indicators point to a firmer payrolls number, the Fed’s hawks are vocal, and France’s budget crisis has no near-term resolution. The euro would need two or three positive surprises to break 1.1310, while the dollar needs only one to push the pair back to 1.1150.

The risk-reward favors selling rallies toward 1.1260 to 1.1270 with a stop above 1.1310, targeting 1.1152 and then 1.1120.

EUR/USD Forecast Verdict: Bearish Tilt in a 1.1150 to 1.1310 Range, 1.1120 Is the Line

EUR/USD’s Thursday session was bearish, and the forecast for the next two weeks leans the same way. The pair at 1.1220 is down 0.10% on the day after failing at 1.1270, giving back most of Wednesday’s election-driven rally to 1.13. The ECB’s 1.1224 fixing was 0.4% below Wednesday’s 1.1267. The euro trades 4.2% below its 2026 starting level and 7% below its yearly high of 1.2067.

The dollar won Thursday on data and Fed rhetoric. Initial jobless claims at 189,000 matched a 57-year low, and third-quarter productivity jumped 3.6%. Cleveland Fed President Hammack, Richmond Fed President Barkin and Dallas Fed President Logan all backed further hikes, with Logan calling for at least two more. December hike odds sit at 74.5%, and the dollar index bounced from 101.20 to 101.51.

The euro lost Thursday on politics and growth. France’s National Assembly unanimously rejected the 2027 budget, hundreds of thousands of workers struck, and the French-German spread remains near the 178-basis-point crisis level reached in October. The euro-area composite PMI fell to a four-month low of 51.7, with France collapsing to 46.6. Euro-area inflation at 4.0% and producer prices at 11.1% force the ECB to keep hiking from 2.50%, but markets see those hikes as defensive.

With both central banks tightening, the rate differential stays wide at 150 basis points on policy rates and 148 basis points on 10-year bonds. That gap caps every euro rally.

Base case for the next 10 trading days: range trade between 1.1150 and 1.1310 with a bearish tilt, as Friday’s payrolls and Tuesday’s CPI set direction. A daily close below 1.1120 targets 1.1000. A daily close above 1.1310 targets 1.1400. Resistance at 1.1270 is the level sellers need to defend, and as long as it holds, the dollar has the upper hand.

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