Euro Rips to 1.1260 Off the 1.1105 Low as DXY Breaks 101.30 — Close Above 1.1270 Targets 1.1300

EUR/USD spent the past three weeks pinned inside a narrow range below 1.1250. Wednesday broke it. The pair climbed 0.6% to 1.1260 during the European session, a gain of 68 pips from Tuesday’s 1.1192 close, after Democrats won control of the House and the Senate in Tuesday’s U.S. midterm elections. The session low printed at 1.1187 during early Asian trading, and the high reached 1.1263 before the U.S. open. An earlier snapshot at 12:55 a.m. ET had the pair at 1.1238, up 0.40%, and a mid-European quote showed 1.12369 before the second leg of the move.

The trigger was the dollar, not the euro. The U.S. Dollar Index fell to 101.30, its lowest level since September 30, down from Tuesday’s 101.87 close. Against the dollar, the euro gained 0.63% on the day, sterling 0.58%, the Australian dollar 0.75% and the Swiss franc 0.66%. Against everything else, the euro barely moved: it was up 0.05% versus sterling and down 0.13% versus the Aussie. The rally in EUR/USD is a dollar selloff wearing a euro label.

The wider tape confirms the read. The 10-year Treasury yield fell 3.5 basis points to 4.915%. Gold ripped 3% to $4,046. WTI crude slid 1.4% to $94.65. S&P 500 futures traded 1.0% higher and European indices surged. That’s a classic weak-dollar, risk-on morning, and EUR/USD as the deepest pair on the board absorbed the bulk of the dollar flow.

Context keeps the move in proportion. EUR/USD set its 2026 high at 1.2081 on January 27, when the euro hit a four-and-a-half-year high above $1.20. It set its 2026 low at 1.1105 on October 29, the day the European Central Bank held rates. The year’s average sits at 1.1564. At 1.1260, the pair has recovered 155 pips, or 1.4%, from the October low but still trades 7.3% below the January peak and 2.6% below its 2026 average. Over 12 months, the euro is down 2.02% against the dollar; over the past month it has gained 0.33%.

The forecast runs from one thesis. Wednesday’s breakout is driven by U.S. politics and U.S. rates, and it has room to extend toward 1.1300 as long as the dollar stays near its one-month low. Above 1.1300, the euro has to carry the move on its own fundamentals, and those fundamentals are weak: 4.0% inflation, a four-month low in business activity, France in contraction and the widest OAT-Bund spread since 2011. That combination defines the ceiling.

Inside the Session: From 1.1187 to 1.1263 and the 2026 Range That Frames It

The intraday path tells you who did the buying. EUR/USD opened the Asian session at 1.1192 and dipped to its 1.1187 low as early U.S. returns showed Democrats taking key Senate seats and Nasdaq futures sank. That dip lasted minutes. As the House call firmed and the Senate math tilted decisively, the dollar sold off across the board, and EUR/USD climbed through 1.1230 before European traders arrived. The second leg came during European hours, when U.S. equity futures reversed their overnight losses and completed a turnaround ahead of Wall Street’s open. EUR/USD followed the risk tape to 1.1263.

The daily mid-rate came in at 1.1225, and the pair spent most of the European session in a 1.1240 to 1.1263 band. That’s a tight consolidation after a sharp move, which usually signals the buying hasn’t exhausted itself. A quote at 1.12558 and another at 1.126198, up 0.49%, show the pair holding the highs into the U.S. morning.

The 2026 range explains why 1.1260 matters. The first quarter belonged to the euro: the pair climbed to 1.2081 on January 27 as the ECB stayed on hold and the dollar weakened. The rest of the year belonged to the dollar. The Iran war pushed energy prices higher, which hit the eurozone, a net energy importer, harder than the U.S. The Federal Reserve resumed hiking in September with a move to 3.75% to 4.00%, its first increase since July 2023. The euro ground lower through the summer and autumn and printed its 2026 low at 1.1105 on October 29.

After the ECB decision that day, EUR/USD recovered to 1.1167 and then spent four sessions building a base between 1.1105 and 1.1200. Technical traders flagged that base as a potential double bottom heading into Wednesday, with resistance at 1.1270 as the measured target and 1.1111 as the invalidation level. The election delivered the catalyst, and the pair is now within 7 pips of that 1.1270 target.

Momentum indicators had been leaning bearish. EUR/USD traded below its Supertrend indicator throughout the three-week range, a sign that sellers controlled the trend even as price stopped falling. A daily close above 1.1270 would flip that signal for the first time since the October breakdown.

The 2026 low at 1.1105 now sits 155 pips below the current price. The 1.1300 handle sits 40 pips above. On a pure distance basis, the near-term risk-reward favors a test of 1.1300, but the euro has failed to hold gains above 1.1250 repeatedly since mid-October, so a daily close matters more than any intraday print.

The Democratic Sweep and the Dollar: Why DXY Fell to 101.30, Its Lowest Since September 30

Democrats took the Senate by winning races in historically red states including Texas, South Carolina and Kansas, and flipped House seats from Florida to New Jersey to Kentucky. President Trump accepted the results, which removed the risk of a contested count. The outcome sets up divided government for the remaining two years of Trump’s final term, and the currency market read it as dollar-negative through three channels.

The first is AI capital flows. The dollar’s strength in 2026 was partly built on foreign money pouring into U.S. technology stocks and the AI data-center buildout. Democrats won governor’s races in Texas and Georgia with candidates pledging moratoriums or pauses on new data centers, and Texas alone accounts for an estimated 27% of planned U.S. data-center capacity. Nasdaq-100 futures fell as much as 2.4% overnight on those results. Traders explicitly tied the dollar’s drop to a one-month low to fears of tighter AI regulation, because tighter rules on the sector that has attracted the most foreign capital means less demand for dollars to buy into it.

The second is fiscal gridlock. A Democratic Congress controls appropriations and the debt ceiling. The new majority has signaled a debt-ceiling challenge, potential impeachment proceedings and investigations into administration allies. A December 11 funding deadline now lands in front of a divided government. Gridlock limits new deficit-financed spending, which trims the term premium on long Treasuries and pushes yields lower. Lower yields reduce the dollar’s carry advantage.

The third is political risk premium. Investors who had priced unified Republican control now face two years of confrontation between the White House and Congress. That uncertainty doesn’t usually crash the dollar, but it removes one support for it.

The counterargument is already circulating. Fiscal restraint under gridlock could eventually support the dollar by reducing bond supply and improving the deficit outlook, and at least one major bank kept its call for EUR/USD at 1.12 on a one-month view and 1.10 on a three-month view despite Wednesday’s move. That forecast rests heavily on French political risk rather than on the U.S. election, which shows how much the euro’s own problems weigh on the medium-term outlook.

The immediate damage to the dollar is clear. DXY dropped 0.56% from 101.87 to 101.30. The Canadian dollar hit a seven-week high, USD/JPY fell below 158.00 to 158.12, and the New Zealand dollar led the majors. For EUR/USD, the 101.00 level on DXY is the next trigger: a break below it would likely push the pair through 1.1300.

U.S. Rates: The 10-Year at 4.915%, 78% Odds of a December Fed Hike and Friday’s Payrolls

The dollar’s weakness on Wednesday comes against a rate backdrop that still favors the greenback. The Federal Reserve raised its policy rate to a 3.75% to 4.00% range in September and held it at the October 27 to 28 meeting under Chair Kevin Warsh, while signaling the tightening cycle isn’t over. Futures price a 78% chance of another 25 basis-point hike at the December 8 to 9 meeting. September PCE inflation, the Fed’s preferred gauge, rose 0.5% month-over-month and 3.6% year-over-year.

Treasury yields are coming off historic highs. The 10-year touched 5.34% in early October, its highest level in 24 years. It closed Tuesday at 4.95% after job openings surged and fell 3.5 basis points to 4.915% on Wednesday. The 2-year sits at 4.61% and the 30-year at 5.32%. Gridlock pushes the long end lower by reducing the odds of new fiscal stimulus, but the short end stays anchored by the Fed.

The labor data keeps feeding the hawks. September job openings jumped 333,000 to 7.523 million, crushing the 7.15 million forecast and hitting a four-month high. Quits climbed to 3.36 million and layoffs fell to 1.64 million, the lowest since March 2025. Wednesday’s ADP report showed private payrolls up 86,000 in October, beating the 69,000 forecast and matching a downwardly revised 86,000 for September. Pay growth for job-changers hit its fastest pace since March 2024. Despite that beat, the dollar stayed weak, which shows how dominant the election channel was on Wednesday.

The ISM services index lands at 10:00 a.m. ET with a 54.7 consensus against a 54.9 prior. Friday’s October jobs report is expected to show nonfarm payrolls up 65,000 after September’s 29,000, with unemployment holding at 4.2%. October CPI follows on November 10.

For EUR/USD, the payroll print is the biggest risk to Wednesday’s breakout. A number well above 65,000 would lock in the December hike, push the 2-year yield higher and revive the dollar. That scenario likely sends EUR/USD back toward 1.1190. A print below 30,000 would cut hike odds below 70%, extend the dollar’s slide and open the path to 1.1300 and beyond.

The asymmetry favors the dollar on data. The U.S. economy keeps beating expectations while the eurozone keeps disappointing. Wednesday’s move was driven by politics overriding data. Friday will show whether politics can keep winning.

Eurozone Inflation Hits 4.0%: Energy Up 20.8% and the ECB’s Stagflation Problem

The euro’s biggest fundamental problem landed Wednesday morning. Euro area annual inflation rose to 4.0% in October from 3.8% in September, according to Eurostat’s flash estimate. The print matched the 4.0% consensus but marked another step higher in a climb that started at 1.7% in January, the lowest in 16 months. Inflation has now more than doubled in nine months.

Energy is the engine. Energy prices rose 20.8% year-over-year in October, driven by the Iran war and the disruption to Strait of Hormuz shipping. Services inflation came in at 3.3%, food, alcohol and tobacco at 1.6%, and other goods at 1.2%. The core measure, which strips out energy, food, alcohol and tobacco, stood at 2.5% in September, up from 2.4%. The gap between 4.0% headline and 2.5% core tells the story: this is an imported energy shock, not domestic overheating.

The path through 2026 shows how fast it built. Headline inflation hit 2.6% in March, 3.0% in April, 3.2% in May, eased to 2.8% in June, then climbed to 2.9% in July, 3.2% in August, 3.8% in September and 4.0% in October. Monthly inflation ran at 0.6% in September alone.

National data shows the pressure is broad but uneven. Spain’s October HICP flash came in at 4.9% with core at 3.1%. Italy’s flash CPI hit 5.4%. In September, Germany’s rate rose to 3.3%, France’s to 3.4%, Italy’s to 4.2% and Spain’s to 5.0%.

For the euro, high inflation cuts both ways. It forces the ECB to keep tightening, which supports the currency through higher rates. It also erodes real incomes and business confidence, which weakens growth and the currency over time. An energy-driven inflation shock in an energy-importing economy is a terms-of-trade loss, and terms-of-trade losses weaken currencies. That’s the core reason EUR/USD fell from 1.2081 to 1.1105 this year even as the ECB raised rates.

Oil is the swing factor. WTI fell 1.4% to $94.65 on Wednesday, and Brent has dropped from a five-month high of $111.99 in October to the $104 area. Qatar is mediating between Washington and Tehran, and a deal that reopens Hormuz traffic would push energy prices down sharply. That scenario helps the euro more than almost any other currency, because it simultaneously cuts eurozone inflation, improves the trade balance and eases the growth squeeze. Falling oil is the euro’s best path to 1.1500.

The ECB: A Hawkish Hold at 2.50%, Lagarde’s Early Exit and a December Hike to 2.75%

The European Central Bank held its deposit rate at 2.50% on October 29, leaving the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. The decision was unanimous, but Christine Lagarde said the Governing Council debated a hike before agreeing to wait. She told reporters the hold doesn’t mean the ECB won’t hike, and that the next meeting is in December. Markets read that as a hawkish hold.

The ECB has already moved twice this year. It delivered its first hike in three years in June, then raised the deposit rate by 25 basis points to 2.50% on September 10, effective September 16, from 2.25%. The 2.50% level sits at the upper limit of the range the ECB considers neutral. Another hike would push policy into restrictive territory for the first time since the 2022 to 2023 inflation fight.

The ECB’s statement flagged energy as the central risk, saying rising energy prices pose upside risks to inflation and downside risks to growth. Lagarde pointed to higher costs for oil, petrol, fuel, gas and refining margins, and to a sharp rise in long-term financing costs, with the average 10-year sovereign yield up 35 basis points since the September projections. She said the ECB isn’t seeing second-round effects beyond what its September projections already include, and that underlying inflation and wage growth remain broadly stable.

The bigger surprise was Lagarde herself. She announced she’ll step down as ECB president in February 2027, nine months before her eight-year term ends in October 2027. That makes December her last full policy meeting with new staff projections, and economists expect her to deliver one final hike to 2.75% before handing over. Some see that as the end of the hiking cycle, giving her successor room before further moves.

Money markets price the same path. As of early October, swaps priced the deposit rate at 2.8% by December, implying one 25 basis-point hike with a 24% chance of a second, and 3.4% by late 2027. Euribor reflects that pricing: the 3-month rate stood at 2.618% on October 28, 11.8 basis points above the deposit rate, and the 12-month at 3.290%, 79 basis points above.

Wednesday’s 4.0% inflation print locks in the December hike. That supports the euro at the margin, but the market has already priced it. The euro needs a surprise, either a second hike signal or a hawkish successor, to gain from ECB policy from here.

The Rate Differential: 137.5 Basis Points in the Dollar’s Favor and Why It’s Narrowing

Rate differentials drive EUR/USD more than any other single factor, and the gap still favors the dollar. The Fed’s policy range sits at 3.75% to 4.00%, with a midpoint of 3.875%. The ECB’s deposit rate sits at 2.50%. That’s a 137.5 basis-point gap in the dollar’s favor at the policy level, and holders of dollar deposits earn more than holders of euro deposits by that margin.

Both central banks are expected to hike in December. Futures price a 78% chance of a 25 basis-point Fed hike on December 8 to 9, and economists widely expect the ECB to move its deposit rate to 2.75% at its December meeting. If both deliver, the gap stays at 137.5 basis points. If the ECB hikes and the Fed holds, the gap narrows to 112.5 basis points, a bullish shift for EUR/USD. If the Fed hikes and the ECB holds, it widens to 162.5 basis points.

The 2027 outlook matters more. Markets see the ECB deposit rate reaching 3.4% by late 2027, which implies roughly 90 basis points of additional tightening beyond today’s level. Fed pricing is more uncertain: some forecasters expect hikes in December and again early in 2027, pushing the 10-year Treasury yield to a peak of 5.25% to 5.50%, while gridlock and softer growth argue the Fed is closer to its peak than the ECB. If the ECB hikes more than the Fed over the next 12 months, the differential narrows and EUR/USD drifts higher.

Long-end yields tell a similar story. Germany’s 10-year Bund yield climbed above 3.6% in late September, its highest since June 2009, before easing to 3.45% by early October as bond-market turmoil prompted investors to scale back ECB hike bets. The U.S. 10-year sits at 4.915%. The 10-year spread runs in the 130 to 150 basis-point range, with the U.S. paying more. That gap explains why foreign capital kept flowing into U.S. bonds through the summer.

Wednesday’s move narrowed the long-end gap at the margin. U.S. yields fell 3.5 basis points on gridlock, while European yields held steadier. Every basis point of compression helps EUR/USD.

The real-rate picture complicates things. With eurozone inflation at 4.0% and the ECB deposit rate at 2.50%, the real policy rate is minus 1.5%. With U.S. PCE inflation at 3.6% and the Fed at 3.875%, the real rate is plus 0.275%. The dollar offers a positive real return; the euro offers a negative one. That 177.5 basis-point real-rate gap is the strongest structural argument against a sustained euro rally.

Eurozone PMI Slides to 51.7: France Sinks to 46.6 as Growth Hits a Four-Month Low

The growth data released Wednesday morning undercut the euro’s rally before it started. The HCOB Eurozone Composite PMI fell to 51.7 in October, a four-month low, from 53.1 in September. That was a downward revision from the 51.9 flash estimate. The services PMI dropped to 51.4 from 53.0, also a four-month low, and below its 51.7 flash reading. Both stayed above the 50 line that separates expansion from contraction, and the survey’s compilers estimated the eurozone economy is growing at 0.3% at the start of the fourth quarter.

The details were worse than the headlines. New business neared stagnation. Eurozone firms cut staff at the fastest pace since May, driven by the first decline in services employment over that period. Business confidence fell for a third consecutive month to its lowest level since May, with firms citing inflation, geopolitical uncertainty and higher borrowing costs. Cost pressures persisted even as activity slowed, which is the stagflation mix the ECB has been warning about.

France was the main drag. Its composite PMI collapsed to 46.6 in October from 51.1 in September, a downward revision from the 48.4 flash and the deepest contraction among the large eurozone economies. French services fell to 46.2 from 51.2. Firms cited protests and rising government bond yields. France’s two-month swing from expansion to deep contraction is the sharpest of any major economy in the survey.

Germany held up better. Its flash composite PMI eased to 52.8 from 53.8, with manufacturing improving to 54.2 from 53.9 while services weakened to 51.7 from 52.9. German factories are benefiting from defense spending and infrastructure investment funded by record bond issuance. Italy, Spain and Ireland continued expanding at slower rates.

The PMI trend through 2026 shows the energy shock’s toll. The composite hit 51.9 in February before dropping to 50.5 in March as the Iran war began. It recovered to 51.9 in July, reached 53.1 in September and has now slipped back to 51.7. Growth is positive but fragile.

For EUR/USD, weak PMIs limit how far the ECB can push rates without tipping the economy into recession. That caps the euro’s rate-differential support. A currency backed by a central bank that can’t hike aggressively because growth is stalling doesn’t rally sustainably on its own fundamentals. That’s why Wednesday’s gain is a dollar story and why it needs the dollar to keep falling to extend.

France Tests the Euro’s Nerve: OAT-Bund Spread at 178 Basis Points and the 2027 Election

The single biggest euro-specific risk sits in Paris. The spread between French 10-year OAT yields and German 10-year Bund yields touched 178 basis points on October 22, its widest since late 2011, and closed that day at 174.6 basis points before easing to 156 basis points on October 26. In mid-September, the spread stood at 96 basis points. It nearly doubled in five weeks.

The positioning shows the move wasn’t a one-off. Open interest in Euro-OAT futures rose by 101,000 contracts in the four days to October 22, a record build that points to fresh short positions rather than old longs exiting. At the end of August, French 10-year debt yielded more than Italian BTPs for the first time, a reversal of the eurozone’s traditional risk hierarchy.

The drivers are fiscal and political. France faces slower growth, a persistent budget deficit, rising debt-servicing costs and a parliament unable to pass meaningful consolidation. The National Assembly voted on the budget on October 20 and 27, and the government is expected to force it through by ordinances or constitutional emergency procedures, keeping the 2027 deficit near 5.3% of GDP. France has cycled through five prime ministers in almost as many years.

The 2027 presidential election hangs over everything. The first round is April 18 and the runoff May 2, with legislative elections likely to follow. Polls show far-right Marine Le Pen and far-left Jean-Luc Mélenchon among the strongest contenders. Markets fear either outcome would bring fiscal expansion rather than restraint. Some forecasters see the spread reaching 150 basis points or more as the vote approaches if growth stays weak.

The transmission to the euro is direct. French fiscal concerns push OATs lower, the OAT-Bund spread widens, eurozone sovereign risk rises, demand for European assets weakens, and the euro comes under pressure. A spread pushing back toward 180 basis points would add a political risk premium on top of rate differentials and cap EUR/USD rallies regardless of what the dollar does.

The ECB’s Transmission Protection Instrument offers a backstop, but only for spread moves the ECB judges unwarranted by fundamentals. France’s widening has clear fiscal drivers, which makes TPI activation politically difficult.

Spain adds a second political event. Prime Minister Pedro Sánchez called a snap election for November 29 after protests over housing costs, though Spain’s 4.9% HICP and stronger growth make it less of a market concern than France.

For EUR/USD traders, the OAT-Bund spread is the gauge to watch next to DXY. A spread below 150 basis points supports a run at 1.1300. A spread back above 170 caps the pair below 1.1250.

Bunds, BTPs and the Eurozone Bond Backdrop: 17-Year Highs and an Energy-Driven Selloff

European bond markets went through their worst stretch in more than a decade this autumn, and that backdrop matters for the euro. Germany’s 10-year Bund yield climbed to 3.40% on September 8, its highest since April 2011, then pushed above 3.45% after the ECB’s September 10 hike. By late September, it rose back above 3.6%, its highest since June 2009, as a deepening energy shock strengthened expectations of further ECB tightening through 2027.

The selloff paused in October. The 10-year Bund fell for five consecutive sessions to 3.412% on October 5, its lowest since September 8, and dropped to 3.45% on October 6 as bond-market turmoil prompted investors to scale back ECB hike expectations. Investors sought the relative safety of German debt as French spreads blew out. That flight-to-quality within the eurozone kept Bund yields from rising further even as OATs sold off.

The 12-month change shows the scale of the repricing. Germany’s 10-year yield rose 73 basis points over the year to early September and gained 21.77 basis points in the four weeks before the September 8 high. In January 2026, the same yield held at 2.87%, after a 50 basis-point rise in 2025 that was the largest annual increase since the 2022 inflation surge. Heavy German bond supply, with a record €512 billion of issuance planned for 2026 to fund defense and infrastructure, added pressure.

Italy has held up better than France. Its 10-year spread over Bunds widened less than France’s, and French debt now yields more than Italian debt. Italy’s 5.4% flash CPI in October is the highest among the large eurozone economies, which keeps the ECB under pressure to keep hiking.

For the euro, rising Bund yields are a mixed signal. Higher German yields narrow the gap with U.S. Treasuries, which supports EUR/USD through the rate channel. The cause of the rise matters, though. Yields driven by inflation fears and sovereign risk don’t attract foreign capital the way yields driven by growth do. The euro fell through September and October even as Bund yields hit 17-year highs, because the rise reflected stress rather than strength.

Lagarde put the average rise in 10-year eurozone sovereign yields at 35 basis points since the ECB’s September projections, and she called that tightening in financing conditions a reason to hold in October. Higher sovereign yields do part of the ECB’s work, which limits how many more hikes the central bank needs to deliver. That caps the euro’s rate support.

The bond market’s message for EUR/USD is caution. European yields are high for the wrong reasons, and until the energy shock fades and French risk eases, higher yields won’t pull capital into the euro.

Cross-Currency Check: The Euro Isn’t Leading, the Dollar Is Losing

The clearest evidence that Wednesday’s move is a dollar story comes from the cross rates. Against the dollar, the euro gained 0.63%. Against sterling, it gained just 0.05%. Against the Australian dollar, it lost 0.13%. Against the Swiss franc, it lost 0.03%. Against the Canadian dollar, it gained 0.13%. Against the yen, it gained 0.41%, the only cross where it moved meaningfully.

The ranking puts the euro in the middle of the pack. The New Zealand dollar led the majors on Wednesday. AUD/USD climbed 0.6% to 0.7010, crossing back above 0.70 days after the Reserve Bank of Australia hiked rates by 25 basis points to 4.85%, an 18-year high, on a 6 to 3 vote. Commodity currencies gained more than the euro because they benefit twice from a weaker dollar and improved global risk appetite.

The Canadian dollar rose to a seven-week high as USD/CAD fell, supported by hawkish remarks from the Bank of Canada governor. Sterling gained 0.58% against the dollar, nearly matching the euro, despite its own domestic pressures: the U.K. 10-year gilt yield jumped 5.9 basis points to 5.261% on Tuesday. The yen was the weakest of the majors against everything except the dollar, with USD/JPY falling 0.4% to 158.12 after touching 158.66 near its 200-day average on Tuesday.

The cross-rate pattern carries a warning for EUR/USD bulls. When a currency pair rallies because one side weakens broadly rather than because the other side strengthens, the move depends entirely on that weakness continuing. If the dollar rebounds on Friday’s payrolls, EUR/USD gives back its gains without any euro-specific bad news.

The euro’s lack of leadership also reflects its fundamentals. A currency backed by 4.0% inflation, a composite PMI at a four-month low, a key member state in contraction and a 178 basis-point sovereign spread peak doesn’t attract independent buying. Traders looking to sell the dollar are choosing the Aussie, the kiwi and the Canadian dollar first, all backed by central banks with higher rates or stronger commodity exposure.

EUR/GBP is a useful secondary gauge. A rising EUR/GBP would signal genuine euro demand. With the cross up just 0.05% on Wednesday, there’s no sign of that yet.

The takeaway for positioning is to treat EUR/USD as a dollar proxy until the crosses confirm otherwise. A sustained move above 1.1300 needs the euro to start outperforming the commodity currencies, which requires either lower oil or narrower French spreads.

The Technical Map: 1.1270 Resistance, 1.1300 Next, 1.1190 Pivot and the 1.1105 Floor

EUR/USD’s chart sets up a clean decision zone. Immediate resistance sits at 1.1270, the measured target of the double-bottom pattern built between the October 29 low and the late-October retest. Wednesday’s high at 1.1263 came within 7 pips. Above 1.1270, the 1.1300 handle is the next barrier, and the pair hasn’t closed above it since early October. A daily close above 1.1300 would confirm a trend change and open the path toward 1.1400 and the 1.1564 2026 average.

The support structure is tight. Wednesday’s daily mid-rate at 1.1225 is the first reference. Tuesday’s close and Wednesday’s open at 1.1192 form the pivot, with the session low at 1.1187 directly below. A close back below 1.1190 would turn Wednesday’s breakout into a failed move and send the pair back into the three-week range. Below that, 1.1167, the post-ECB recovery level from October 29, is the next support. The double-bottom invalidation sits at 1.1111, and the 2026 low at 1.1105 is the floor.

Momentum is turning. EUR/USD traded below its Supertrend indicator through the entire three-week range, signaling seller control. Wednesday’s move pushed price toward that line for the first time since mid-October. A daily close above 1.1270 would likely flip it bullish.

The range structure defines the trade. For three weeks, buyers defended 1.1105 to 1.1111 and sellers defended 1.1250 to 1.1270. Wednesday’s move pushed price to the top of that range on a macro catalyst. If the dollar keeps falling, the range breaks higher. If Friday’s payrolls revive the dollar, the range holds and price returns to the middle.

The risk-reward favors a measured long bias. From 1.1260, the distance to 1.1300 is 40 pips. The distance to 1.1190 is 70 pips. That’s unfavorable for chasing the move at the highs, which argues for waiting for a pullback toward 1.1225 or a confirmed close above 1.1270 before adding exposure. For short-term traders, the cleaner setup is a buy on a dip to 1.1225 targeting 1.1300 with a stop below 1.1187.

Volatility is elevated but not extreme. The day’s range ran 76 pips from 1.1187 to 1.1263, larger than the three-week average but small relative to the 2026 swing of 976 pips between 1.1105 and 1.2081. Stops placed inside 30 pips of current price will get hit on payroll noise Friday.

The Catalyst Calendar: ISM Today, Payrolls Friday, U.S. CPI November 10 and the December Showdown

EUR/USD faces a dense calendar that will decide whether Wednesday’s breakout holds. The ISM services index lands at 10:00 a.m. ET Wednesday with a 54.7 consensus. A beat would revive the dollar within hours; a miss would extend the slide. The S&P Global U.S. services PMI comes out at 9:45 a.m. ET.

Friday’s October jobs report is the week’s main event. Consensus calls for nonfarm payrolls of 65,000, private payrolls of 64,000 and unemployment at 4.2%. Wednesday’s ADP beat raised the risk of an upside surprise. A payroll print above 100,000 would push the December Fed hike odds above 85% and likely send EUR/USD back to 1.1190. A print below 30,000 would cut hike odds and give the pair the fuel to clear 1.1300.

U.S. October CPI lands November 10. With crude down from its October peak, the energy component should ease, but core inflation has stayed sticky. A soft print would be the first data point in months to challenge the December hike.

On the eurozone side, Eurostat publishes full October inflation data on November 18, confirming or revising Wednesday’s 4.0% flash. Spain’s snap election on November 29 adds a political event, though Spain’s stronger growth makes it a smaller risk than France. The French budget process continues through year-end, and any government collapse or failed confidence vote would widen OAT spreads and hit the euro immediately. Eurozone November inflation flash data follows on December 1.

The two central bank meetings are the main events. The Fed meets December 8 to 9 with a 78% hike probability priced in. The ECB meets in December with a hike to 2.75% widely expected, at Lagarde’s last full policy meeting with staff projections before her February exit. If both hike, the rate differential stays unchanged and EUR/USD trades on guidance. If the ECB signals more hikes into 2027 while the Fed signals a pause, the pair could rally sharply.

The U.S. government funding deadline on December 11 lands two days after the Fed decision. A shutdown fight under a newly divided Congress would weigh on the dollar, adding a political tailwind for EUR/USD into year-end.

Oil runs underneath everything. A U.S.-Iran deal through Qatari mediation would cut eurozone energy inflation, ease ECB pressure and improve the euro’s terms of trade. A collapse in talks would push Brent back toward $110 and send EUR/USD back to the 1.1105 low.

EUR/USD Price Forecast: Bullish Toward 1.1300 on Dollar Weakness, Capped by France and 4.0% Inflation

EUR/USD broke out of a three-week range on Wednesday because the dollar broke. The Democratic sweep pushed the Dollar Index to 101.30, its lowest since September 30, sent the 10-year Treasury yield down to 4.915% and lifted the pair 0.6% to 1.1260, a gain of 68 pips from Tuesday’s close and 155 pips from the October 29 low at 1.1105. The move completed most of a double-bottom pattern targeting 1.1270.

The euro’s own fundamentals didn’t help. Eurozone inflation rose to 4.0% in October with energy up 20.8%. The composite PMI fell to a four-month low of 51.7, France collapsed into contraction at 46.6, and the OAT-Bund spread peaked at 178 basis points in late October, its widest since 2011. The ECB holds its deposit rate at 2.50% with a December hike to 2.75% priced, while the Fed sits at 3.75% to 4.00% with 78% odds of its own December hike. A 137.5 basis-point policy gap and a 177.5 basis-point real-rate gap still favor the dollar.

The cross rates confirm the read. The euro gained 0.63% against the dollar but just 0.05% against sterling and lost 0.13% against the Australian dollar. This is a dollar selloff, and EUR/USD can only extend as far as the dollar falls.

The forecast sets clear levels. The near-term bias is bullish above 1.1190 on a closing basis. The first target is 1.1270, the double-bottom objective and the top of the three-week range. A daily close above 1.1270 targets 1.1300, a 40-pip move from current levels. A break above 1.1300 needs either a weak U.S. payroll print or a drop in the OAT-Bund spread below 150 basis points, and would open 1.1400. Support sits at 1.1225, 1.1190, 1.1167 and 1.1111, with the 2026 low at 1.1105 as the floor. A close below 1.1190 would mark Wednesday as a failed breakout and send the pair back to retest 1.1105.

The verdict: bullish short term, range-bound medium term. The Democratic sweep weakened the dollar through lower yields, reduced AI capital inflows and fiscal gridlock, giving EUR/USD a clear path to 1.1270 and a probable test of 1.1300 before Friday’s payrolls. Above 1.1300, the euro has to carry the move on fundamentals that remain weak, with 4.0% inflation, a stalling economy and French political risk ahead of the April 2027 election capping rallies. Hold 1.1190 through payrolls and the pair grinds toward 1.1300 into the December central bank meetings; lose it and 1.1105 comes back into play.

That's TradingNEWS