EUR/USD Forecast: 1.1104 Support at Risk as Dollar Hits 12-Day High

The euro remained under pressure on Wednesday, with EUR/USD trading around 1.1166 after extending Tuesday’s decline. Stronger US inflation data and hawkish comments from Federal Reserve officials have boosted demand for the US dollar, leaving the currency pair vulnerable to further losses. The US Dollar Index (DXY) also held near its 12-day high of 102.41. Traders are now assessing whether the Fed will deliver a 25-basis-point increase or consider a larger move at its December meeting.

Hot US CPI Fuels Fed Rate Hike Bets

The latest report from the US Bureau of Labor Statistics showed that the Consumer Price Index (CPI) increased 0.4% in October, following a 0.6% rise in September. The core CPI measure, which excludes food and energy, advanced 0.3%, matching its increases in August and September.

The figures have reinforced concerns that inflation remains persistent, strengthening the case for additional monetary tightening. However, the BLS could not publish annual inflation comparisons for October because it did not collect October 2025 survey data during the government funding lapse. This limits the availability of year-over-year comparisons for several CPI categories.

Federal Reserve Governor Christopher Waller has added to the hawkish outlook. He indicated that a 0.3% monthly core inflation reading could justify a more aggressive policy response, including a potential 50-basis-point increase in December.

TD Securities also sees a December rate increase as increasingly likely, although the bank continues to favor a 25-basis-point move. The discussion has therefore shifted from whether the Fed will raise rates to how large the increase could be.

The main factors influencing the dollar include:

• October headline CPI increased 0.4% month over month.
• Core CPI rose 0.3%, maintaining its recent pace.
• Waller has left the door open to a 50-basis-point increase.
• TD Securities favors a 25-basis-point move, with further tightening risks.

EUR/USD Technical Analysis

The EUR/USD pair traded near 1.1167 on the daily chart, remaining below its 20-day Exponential Moving Average (EMA) at 1.1202. The indicator measures the average price over a selected period while giving greater weight to recent trading sessions. Trading below it signals that the near-term trend remains under pressure.

The Relative Strength Index (RSI) stood at 43, below the neutral 50 threshold. This points to negative momentum, although the indicator has not reached the commonly used oversold level of 30.

The 1.1202 EMA is the first important resistance. A sustained daily close above it could ease selling pressure and create room for a recovery. Until that happens, the technical setup favors sellers.

1.1104 Support in Focus

The immediate downside level is 1.1104, identified in the supplied market snapshot as a 17-month low. A decisive break beneath this support could expose the psychological 1.1000 level and reinforce the bearish outlook.

Key levels to monitor are:

• Resistance: 1.1202, the 20-day EMA.
• Immediate support: 1.1104, the recent 17-month low.
• Next downside level: 1.1000, a psychological price threshold.

Conclusion

EUR/USD faces continued downside risks as firm US inflation and expectations of another Fed rate increase support the dollar. The pair’s position below the 20-day EMA and an RSI reading of 43 reinforce the cautious technical outlook. However, 1.1104 remains the decisive support level. A confirmed break below it would strengthen the case for a move toward 1.1000, while a recovery above 1.1202 would weaken the immediate bearish bias. Traders will also monitor further US inflation signals and Fed commentary for clues about the size of the December rate decision.