Forex News

• EUR/USD clings to losses near 1.1166 as the US Dollar strengthens.
• Hot US CPI data for October has made a Fed interest rate hike in December almost certain.
• Financial markets start debating over the size of Fed’s rate hike next month.

The Euro (EUR) holds onto Tuesday’s losses at around 1.1166 against the US Dollar (USD) at the start of the European trading session on Wednesday.

The EUR/USD pair is under pressure as the US Dollar has strengthened due to fears of Federal Reserve’s (Fed) supersized interest rate hike in the December policy meeting, emerging from hot United States (US) Consumer Price Index (CPI) data for October, which was released on Tuesday.

As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades close to its fresh 12-day high of 102.41 posted on Tuesday.

Fed December hike seen as sealed as debate shifts to size of move

According to TD Securities, the “strong upside surprise in the US CPI makes a December hike all but certain,” with the bank reiterating that “today's data certainly seals a Dec rate hike by the Fed.” Strategists note that “after Waller's speech, the debate has now shifted to whether the FOMC will go 25 or 50bps,” as Governor Waller’s pre-CPI remarks have sharpened the focus on the need for a potential “catch-up” move. TD Securities writes that the discussion will now center on whether the Fed should implement 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.” For now, they emphasize that “we still favor a 25bp hike with a rising risk of another hike in January.”

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1167, maintaining a bearish near-term tone as spot holds beneath the 20-day Exponential Moving Average (EMA) at 1.1202. The pair remains pressured while it fails to reclaim this short-term trend gauge, although the Relative Strength Index (RSI) at 43 stays below the midline, hinting at only modest negative momentum rather than outright oversold conditions.

On the topside, initial resistance is clearly defined by the 20-day EMA at 1.1202, and a daily close above this barrier would be needed to ease immediate downside pressure and open room for a more meaningful rebound. Looking down, the 17-month low at 1.1104 is the key support level; a break below the same would expose the pair to the psychological level of 1.1000.

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

Waller flags risk of larger december hike, lifting Dollar bulls

Fed’s Waller delivered a distinctly more hawkish tone, with a 9/10 FXS Speechtracker score standing well above the 7.3/10 historical average and underscoring a strong bias toward further tightening. The explicit openness to a half-point rate hike in December if core CPI prints around 0.3% or higher, alongside support for at least a quarter-point move even on better data, signals a low bar for additional hikes and a clear intent to push real rates higher as policy has “not been nearly as restrictive” as previously thought. Emphasis on broad-based price pressures, persistent producer and energy cost risks, and still-solid labor conditions reinforces upside risks for US yields and supports the Dollar on a relative policy divergence narrative.

The FXS Fed Sentiment Index rose by 3.17 points to 145.50, confirming a decisive shift deeper into hawkish territory consistent with the elevated FXS Speechtracker score. With the index far above the neutral 100 mark, markets are likely to price a higher probability of a December hike and potentially a larger move, favoring the Dollar against lower-yielding peers.