EUR/USD eased in Asian trading on Friday, pulling back from a weekly high near 1.1240, yet it held above 1.1200 as markets waited for Federal Reserve Chair Kevin Warsh to speak at the IMF and World Bank Group meetings in Bangkok. US CPI and PPI releases this week kept expectations alive for at least one Fed rate increase this year, with December again in focus. US bond yields steadied after an overnight slump, and renewed safe-haven demand for the dollar grew alongside geopolitical risk after an Iran-backed Houthi missile attack on the presidential palace in Aden, adding to tensions with Saudi Arabia and the US-Iran standoff over the Strait of Hormuz.
Fed Policy Outlook And Market Expectations
UOB said markets have lifted the implied chance of an October hike but maintained a base case for the Fed to stay on hold at the October FOMC meeting, citing election proximity and event risk. It then forecast a 25 bps hike in Dec 2026 and another 25 bps move in 1Q 2027, before a pause for the rest of 2027. Technically, EUR/USD stayed below the 100-period SMA on the four-hour chart and under the 23.6% Fibonacci retracement, with support at 1.1114; resistance levels were flagged at 1.1254, 1.1264, 1.1341 and 1.1411, while euro sentiment was also weighed by concerns over France’s public debt and budget deficit.
