EUR/USD extended Tuesday’s rebound to about 1.1210 in Asian trading as the US Dollar eased while the pause in the US Treasury yield advance held ahead of September CPI. The 10-year yield slipped to around 5.20% from a recent multi-decade high of 5.36%, and the Dollar index (DXY) was 0.1% lower near 102.10 after retreating from Monday’s 102.61 peak. Markets are focused on forecasts for headline CPI and core CPI to rise 3.6% and 2.5% year on year, respectively, while the Federal Reserve’s policy stance is expected to remain broadly steady even if core CPI reaches 2.5%. The CME FedWatch tool indicates expectations for rates to be left unchanged later this month, with a hike priced in for December.
Euro-Specific Risks and Technical Levels
Euro gains may be limited by French fiscal risks linked to rising public debt and expectations the European Central Bank will keep policy steady. In a Reuters poll conducted 5–8 October, 70 of 73 economists forecast the ECB will hold the deposit rate at 2.50% on 29 October. Technically, EUR/USD remains below the 20-period EMA at 1.1303, with the RSI at 32.15 just above oversold levels; resistance sits near 1.1303, while support is seen at the 12 October low of 1.1153, ahead of 1.1100.
