EUR/USD: Dollar Climbs To 19-Month Highs

EUR/USD is trading around 1.1100 as the dollar continues to strengthen following hotter-than-expected US inflation. The DXY index has risen to 103.02, its highest level since April 2025. Markets are now almost fully pricing in a Fed rate hike in December and are also assigning some probability to a larger 50-basis-point move.

3 Takeaways

• EUR/USD is trading around 1.1095–1.1100.

• DXY has risen to 103.02, its highest level in 19 months.

• Markets price an 87.3% probability of a 25-basis-point Fed rate hike in December, with a 12.7% chance of a 50-basis-point move.

Following the CPI report, markets continue to reprice not only the December meeting but also the expected path of US interest rates in early 2027.

Goldman Sachs and several other banks now expect an additional rate hike after December. This is supporting US Treasury yields and keeping the dollar in a strong position.

The euro is attempting a modest rebound from its lows and is trading around 1.1096, but the move remains largely technical. Even expectations of a possible ECB rate hike in December have not been enough to offset the much sharper hawkish repricing of the Fed outlook.

Federal Reserve

Today, attention turns to New York Fed President John Williams.

Markets will be looking closely for confirmation that Fed officials are prepared to accelerate tightening after the stronger CPI report.

Christopher Waller previously said that a 0.3% monthly core CPI reading could justify discussing a 50-basis-point move. That was exactly the result published on Tuesday.

Technical outlook

EUR/USD is testing the 1.1090–1.1100 area.

A break below this zone would open the way toward 1.1050, followed by the psychological 1.1000 level.

Initial resistance is located around 1.1120–1.1150. A more important resistance area is 1.1200.

As long as the pair remains below 1.1150, the short-term advantage stays with the dollar.

FAQ

Why does the dollar continue to rise?

Markets are pricing in a more aggressive Fed tightening path after strong NFP data and hotter-than-expected inflation.

Could the Fed raise rates by 50 basis points in December?

Yes. It is not the base-case scenario, but markets are already assigning some probability to such a move.

Which levels are key?

Support is at 1.1090–1.1100 and 1.1050. Resistance is at 1.1120–1.1150 and 1.1200.