Euro’s losing streak against US Dollar continues: What next for Fed-ECB policy?

• Underperformance in the Euro drives a further decline towards 1.1140 against the US Dollar.
• Bond market worries resurface following a sharp rebound in French bond yields.
• Interest rates are expected to remain on hold at both the Fed and the ECB this week.

Selling pressure on the Euro (EUR) pushes EUR/USD down towards 1.1140 on Tuesday, with renewed worries about the French bond market weighing on the currency’s performance. Against the US Dollar (USD), the Euro is now on course for its fifth consecutive trading day of losses.

Following a two-day correction, French bond yields have resumed their rise. At the time of writing, the yield on 10-year French bonds is trading near 4.97%, up 1.42%.

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

The Euro has also faced pressure from a cautious market ahead of Thursday’s monetary policy announcement by the European Central Bank (ECB). Key releases due on Friday, including Germany’s preliminary Harmonised Index of Consumer Prices (HICP) for October and Q3 Gross Domestic Product (GDP) data, have added to that caution.

An unchanged set of key ECB interest rates is the expectation of analysts at Commerzbank, although they suggest the pause could be short-lived. They warn 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 major currency pair has come from sustained US Dollar strength as markets await Wednesday’s monetary policy announcement from the Federal Reserve (Fed). Tracking the Greenback against six major currencies, the US Dollar Index (DXY) is up 0.2% at around 102.20 at the time of writing.

Little change in the Fed’s formal communication is anticipated by economists at Deutsche Bank at the forthcoming decision. They note that “the statement itself [is] to contain only limited changes, although dissents to a hold are possible.” Their focus is instead on the press conference: “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,” they say. Markets are likely to examine his comments closely for any change in the policy narrative.

EUR/USD Technical Analysis: Can The Pair Ease Its Downside Bias?

The near-term outlook for EUR/USD remains bearish on the daily chart, where the pair trades at 1.1149 and continues to retreat below the short-term Exponential Moving Average (9, close, 0). That average, at 1.1197, now acts as immediate resistance. Meanwhile, a Relative Strength Index (14) reading of 32 places momentum just above oversold territory, suggesting that selling pressure remains in place without yet being exhausted.

A daily close above the 9-period exponential moving average around 1.1197, the first resistance on the upside, would be required to soften the prevailing bearish tone. The supplied dataset offers no nearby technical support levels, leaving EUR/USD exposed to additional declines. 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.)