EUR/USD is slightly lower on Tuesday, trading around 1.1220 after a moderate rise yesterday. The dollar is strengthening despite growing expectations of a possible US-Iran deal. The market’s focus is on the upcoming release of US inflation data.
Oil prices have fallen to their lowest levels since August amid optimism surrounding diplomatic efforts to resolve the Middle East conflict. Donald Trump said the negotiations were making progress and acknowledged that new strikes on Iran may not be necessary. Cheaper oil reduces inflation risks and may eventually provide moderate support for the euro.
The main event today will be the US Consumer Price Index (CPI) for October. Headline inflation is expected to accelerate to 3.9% year-on-year from 3.7%, with core inflation rising to 2.8% from 2.6%. Following the strong NFP report, markets have increased expectations of a Fed rate hike in December, with the likelihood of such a move estimated at around 82% versus 76% late last week. Comments from Fed officials also remain fairly hawkish, particularly amid persistent inflationary pressure in the services sector.
At the same time, the euro faces its own pressures. Political and fiscal instability in France continues to weigh on investor sentiment, while reports of Christine Lagarde’s possible early departure add to uncertainty about future ECB policy. Meanwhile, lower oil prices and the gradual stabilisation of markets following the recent technology sector sell-off may partially limit any further decline in EUR/USD.
Technical Analysis
The H4 EUR/USD chart continues to show a sideways structure with a downward bias. After declining to 1.1131, the market recovered and approached resistance at 1.1223. The current rise is viewed as a correction of the preceding downward wave. The nearest target for buyers is 1.1245, the upper boundary of the corrective move. As long as the price remains below this level, the conditions for sellers to return remain in place. The MACD signal line is below zero but turning upwards, reflecting a recovery in short-term momentum without confirming a sustained uptrend.
On the H1 EUR/USD chart, an ascending channel has formed following the reversal from the November low. The price is consolidating near 1.1223, indicating a slowdown in growth. As of 11 November, the baseline scenario envisages a corrective decline towards 1.1187, followed by a recovery towards 1.1245 if support holds. The Stochastic oscillator is between 50 and 80, with its lines pointing upwards. This supports the possibility of a continued recovery but does not yet confirm the expected pullback.
The price reaction at 1.1187 will determine the next move. Consolidation below support would disrupt the hourly ascending channel structure and increase the likelihood of a decline towards 1.1160, followed by 1.1131. The deeper target at 1.1100 relates to a continuation of the downward wave beyond the daily scenario. Sustained consolidation above 1.1245 would weaken expectations of a downward reversal and open the way towards 1.1272. Corrective price action remains the priority for the upcoming session, with the nearest boundaries likely to be tested before a breakout confirms the direction.
Conclusion
EUR/USD is trading slightly lower as markets await the October US CPI release, which could reinforce expectations of a December Fed rate hike, with the probability of such a move currently estimated at around 82%. The dollar is finding support from hawkish Fed commentary and strong recent labor market data, while falling oil prices, driven by optimism over US-Iran negotiations, may support the euro by reducing inflation risks. However, the euro remains weighed down by political and fiscal instability in France, with reports of Christine Lagarde’s possible early departure adding further uncertainty. Technically, the pair remains within a sideways structure with a downward bias, with resistance at 1.1223 and 1.1245, and support at 1.1187. Consolidation below support would increase the likelihood of a decline towards 1.1160 and 1.1131, while sustained consolidation above 1.1245 would open the way towards 1.1272. The upcoming CPI data and the pair’s reaction at key levels will
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