EUR/USD extended losses on Tuesday, trading around 1.1190 and down 0.28%, after falling below the 1.1200 mark following firmer US inflation data. US CPI rose 0.4% month-on-month in October versus a 0.3% forecast, while easing from September’s 0.6% pace; core CPI increased 0.3% against expectations of 0.2% and matched the prior month. The data lifted the US Dollar Index by 0.3% to about 102.00. Markets priced a 99% probability of a 25-basis-point Fed hike in December, up from 84% a day earlier, which would take the funds target range to 4.00%–4.25%. A Reuters poll showed all 101 economists expect a 25-basis-point move on 9 December, though 56 see that as the last hike and 45 expect at least two more.
Eurozone Developments and Technical Picture
The euro drew some support as the French–German 10-year spread narrowed to about 145 basis points from roughly 175 at its October peak, though France’s political and budget backdrop remained a constraint. The ECB indicated another December increase could be prudent, while Eurozone inflation is seen ending the year slightly above 4%. Technically, EUR/USD traded at 1.1189 on the four-hour chart, staying below the 100-period SMA at 1.1196 and the 200-period SMA at 1.1227, with the RSI near 47. Resistance sits at 1.1196, then 1.1227 and 1.1275, while support is around 1.1100.
