The EUR/USD pair ends the week trading near its lowest for 2026, having bottomed at 1.1043 on Friday, a level last seen in April 2025. The US Dollar (USD) rallied on persistent inflationary pressures and hawkish comments from Federal Reserve (Fed) officials.
Geopolitical noise keeps fueling risk aversion
Meanwhile, demand for high-yielding assets remained subdued amid continued geopolitical tensions in the Middle East, spurring energy-supply concerns. Tensions in the Persian Gulf this time revolve around Saudi Arabia and Iran, as the Iran-backed Houthi group renewed strikes on Saudi Arabia, targeting Oil and military infrastructure. Also, United States (US) President Donald Trump claimed on Wednesday that a deal with Iran is no longer needed. “Those days have long since passed,” he added in a Truth Social post. “We’ve got their money, hundreds of billions of dollars, and we’ve got their Strait,” he said.
In Europe, tensions revolved around fiscal and political woes in France, pushing local bond yields sharply higher, resulting in the 10-year French note yielding over 5%. The spillover was limited, falling into Italy, Spain, and Portuguese risk premiums.
But the Old Continent also faces mounting inflationary pressures. Despite Oil prices having receded, it’s worth remembering the Eurozone annual inflation reached 4.0% in October, up from 3.8% in the previous month, marking its highest level in over three years
Data kept concerns high
Data-wise, the US released October Consumer Price Index (CPI) figures. On a monthly basis, inflation, as measured by the CPI, rose 0.4% in October, above the expected 0.3% but below the 0.6% posted in September. The core monthly reading printed at 0.3%, above the 0.2% anticipated by market analysts and matching the September reading. Annual figures were not released amid the lack of data from October 2025 during the US government shutdown. Meanwhile, wholesale inflation rose in October to 6.5% from 6.3%, according to the Producer Price Index (PPI).
Across the pond, Germany confirmed the October Harmonized Index of Consumer Prices at 2.8% YoY, as previously reported, while the Eurozone upwardly revised the initial estimate of the Q3 Gross Domestic Product from 1.2% to 1.3% YoY.
Hawkish central bankers multiply
Inflation readings triggered the corresponding response from central bank officials: Hawks dominate the scene.
The European Central Bank (ECB) left rates unchanged at its October meeting, yet President Christine Lagarde recently repeated that inflation is likely to remain high in the near future. Lagarde, who is set to step down in February 2027, is rumored to be participating in the upcoming French Presidential election, although she has not officially confirmed it. Nevertheless, market talks add to uncertainty and tensions in the country.
Spanish Pablo Hernandez de Cos, the General Manager of the Bank for International Settlements, and the Netherlands’ Klaas Knot, former central bank chief, have been nominated by Eurozone nations to succeed Christine Lagarde.
Among others, ECB Chief Economist Philip Lane said that if the data do not change before the next meeting in December, raising euro-area borrowing costs would be a “prudent” move.
US officials were also on the wires, although the most surprise came from Fed Governor Christopher Waller, who noted that a 50-basis-point hike next month could not be ruled out, adding that a 25-basis-point hike would put the Fed’s credibility at risk. “So, while the precise timing of the hikes doesn’t matter, ensuring that the promised hikes are implemented in a reasonable period of time does,” he added.
On Friday, Chicago Fed President Austan Goolsbee noted that inflation is broad-based and “going the wrong way,” while spreading into categories where prices are not being driven by energy. “Inflation will determine the path of rates,” he added.
Rate hikes are widely expected at the December meetings in both the Euro bloc and the US. The extent of such hikes, and what policymakers hint at next, remains unknown, but investors are piling bets on persistent inflationary pressures that could lead to additional hikes in 2027.
What’s next in the docket
The upcoming days will bring some minor figures, including US Retail Sales, the Federal Open Market Committee (FOMC) Minutes, and the EU final October HICP.
However, multiple Fed and ECB officials will be on the wires throughout the week, and more hawkish hints will flood the news. Mounting bets on a 50-basis-point hike in the US will likely keep the USD on the winning side.
EUR/USD Technical Outlook:
The EUR/USD pair finished the week a handful of pips above the 1.1000 psychological level, but the bearish run is far from done.
In the daily chart, EUR/USD extends its bearish bias. Spot holds firmly below the 20-day Simple Moving Average (SMA) at 1.1172 and the 100-day SMA at 1.1402, with the 200-day SMA still higher at 1.1524. This configuration suggests the broader trend remains firmly in place. The same chart shows technical indicators holding in negative territory, though without directional strength, given Friday’s limited intraday range.
In the weekly chart, EUR/USD trades below the 200‑week SMA at 1.1111 for the first time since March 2025, quite a bearish signal, moreover, considering it’s also below the shorter moving averages, with the 100‑ and 20‑week SMAs clustered around 1.1396–1.1397. At the same time, the Relative Strength Index (RSI) indicator heads firmly south into oversold territory near 29.9, while the Momentum indicator also stays negative, reflecting persistent downside.
On the topside, initial resistance is located at the 200-week SMA at 1.1111, followed by the 20-day SMA around 1.1172. Additional buying could push the pair toward the 1.1240-60 region, although sellers are likely to keep upside capped. The psychological 1.1000 mark is the initial support, followed by the May 2025 monthly low at 1.0951. If the latter gives up, a slide toward 1.0700 will be on the table.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
