1.1100: EUR/USD Price Forecast Points to Further Downside Below This Level

• 1.1166: EUR/USD Remains Under Pressure as US Dollar Firms.
• October’s hot US CPI reading has left a December Fed interest rate hike almost certain.
• The size of next month’s Fed rate increase is now the focus of debate in financial markets.

1.1166 is the approximate level for the Euro (EUR) against the US Dollar (USD). Tuesday’s losses remain in place as Wednesday’s European trading session begins.

Pressure on EUR/USD reflects a stronger US Dollar as markets fear an outsized interest rate increase from the Federal Reserve (Fed) at its December policy meeting. Those concerns followed Tuesday’s release of hot United States (US) Consumer Price Index (CPI) figures for October.

At the time of writing, the US Dollar Index (DXY) is trading near 102.41, the fresh 12-day high reached on Tuesday. The index measures the Greenback against six major currencies.

December Fed Hike Viewed as All but Certain; Size Now in Focus

TD Securities regards a December increase as effectively settled, saying the “strong upside surprise in the US CPI makes a December hike all but certain,” and reiterating that “today's data certainly seals a Dec rate hike by the Fed.” The focus has instead turned to the scale of tightening. Strategists say that “after Waller's speech, the debate has now shifted to whether the FOMC will go 25 or 50bps,” with Governor Waller’s comments before the CPI release drawing greater attention to a possible “catch-up” move. In TD Securities’ view, the question is whether the Fed should deliver a “catch-up 50bps rate hike in December, or whether to maintain course with a 25bps rate increase and provide strong guidance toward a potential January follow-through.” Their current preference remains unchanged: “we still favor a 25bp hike with a rising risk of another hike in January.”

1.1202 EMA Caps EUR/USD: Technical Analysis

At 1.1167 on the daily chart, EUR/USD retains a bearish near-term bias below its 20-day Exponential Moving Average (EMA) of 1.1202. Failure to regain this short-term trend indicator keeps the pair under pressure. However, the Relative Strength Index (RSI) reading of 43, below the midpoint, suggests modest downward momentum rather than outright oversold conditions.

The 20-day EMA at 1.1202 provides the first upside resistance. A daily close above it is needed to relieve immediate selling pressure and create scope for a more substantial recovery. On the downside, key support lies at the 17-month low of 1.1104. A breach would leave the pair exposed to the psychological 1.1000 level.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

9/10 Waller Score Supports Dollar Bulls as Larger December Hike Remains Possible

A 9/10 FXS Speechtracker score, against a historical average of 7.3/10, highlights the distinctly more hawkish tone of Fed Governor Waller’s remarks and a strong preference for further tightening. Waller explicitly left open a half-point December increase if core CPI comes in around 0.3% or above, while backing at least a quarter-point rise even if the data improve. This sets a low threshold for further hikes and indicates a clear intention to raise real rates, given that policy has “not been nearly as restrictive” as previously believed. His focus on widespread price pressures, persistent risks from producer and energy costs, and continued labour-market strength reinforces upside risks to US yields. It also lends support to the Dollar through relative monetary policy divergence.

A 3.17-point increase took the FXS Fed Sentiment Index to 145.50, signalling a decisive move further into hawkish territory in line with the high FXS Speechtracker score. The reading is well above the neutral 100 level. Markets are therefore likely to assign a greater probability to a December rate increase, potentially a larger one, favouring the Dollar over lower-yielding currencies.