Euro’s losing streak against US Dollar continues as Fed-ECB policy comes into focus

• 1.1140 in focus as the Euro underperforms, extending losses against the US Dollar.
• Bond market worries resurface following a sharp rebound in French bond yields.
• Unchanged interest rates are expected from both the Fed and the ECB this week.

EUR/USD drops towards 1.1140. Renewed worries over the French bond market leave the Euro (EUR) underperforming, with Tuesday marking its fifth consecutive trading day of losses against the US Dollar (USD).

After a two-day pullback, French bond yields have turned higher again. At the time of writing, the yield on 10-year French bonds has risen 1.42% to around 4.97%.

The decline in French bond yields over the past two days followed Moody’s decision to retain the sovereign’s Aa3 rating with a negative outlook, contrary to market expectations.

Cautious positioning ahead of Thursday’s monetary policy announcement from the European Central Bank (ECB) has added pressure on the Euro. Market participants also await key releases on Friday: Germany’s preliminary Harmonised Index of Consumer Prices (HICP) for October and Q3 Gross Domestic Product (GDP) data.

An unchanged set of key ECB interest rates is the forecast from Commerzbank analysts, although they warn that any pause may be short-lived. They caution that “in December, however, it will likely raise rates once again due to persistently high inflation – unless French government bond yields do not completely spin out of control.”

Further pressure on the currency pair comes from sustained US Dollar strength ahead of Wednesday’s monetary policy announcement by the Federal Reserve (Fed). The US Dollar Index (DXY), a measure of the Greenback against six major currencies, is trading around 102.20 at the time of writing, up 0.2%.

Little of note is expected in the Fed’s formal communication at the upcoming decision, according to Deutsche Bank economists. They anticipate “the statement itself [is] to contain only limited changes, although dissents to a hold are possible.” Their focus instead is that “the interest will therefore be in Chair Warsh’s press conference and how the Fed balances still-elevated inflation and solid growth against the recent tightening in financial conditions,” as markets are likely to examine his comments closely for changes in the policy narrative.

1.1197 Resistance: EUR/USD Technical Outlook

At 1.1149 on the daily chart, EUR/USD continues to retreat beneath the short-term exponential moving average (9, close, 0) at 1.1197. That average now acts as immediate resistance, leaving the near-term outlook bearish while the pair remains below it. The Relative Strength Index (14), at 32, sits just above oversold territory. This suggests selling pressure remains in place and has yet to run its course.

A daily close above the 9-period exponential moving average around 1.1197 would be required to soften the prevailing bearish tone, with that level providing the first upside barrier. The supplied dataset identifies no nearby technical support, leaving the pair exposed to additional losses. Before a meaningful rebound can take shape, traders are likely to look for new horizontal support or price-action floors below 1.1149.

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