EUR/USD edged up to about 1.1220 early on Monday in Asia, recouping some losses as markets positioned for this week’s ECB and Federal Reserve rate decisions, while Germany’s IFO release was also in focus. The Euro’s upside was framed by political and fiscal anxiety in France after a second weekend of violent cost-of-living protests; the Interior Ministry put participation at roughly 410,000 people across major cities including Paris, raising concerns about near-term pressure on the single currency.
Central Bank Policy Expectations
Policy expectations remained central. The ECB was expected to hold its benchmark rate at 2.5% on Thursday, even as markets anticipated further tightening before year-end and swaps implied nearly 75bps of hikes to 3.25% over 12 months, while one scenario flagged downside risk towards 1.1000. In the US, markets priced a 90.6% probability of no change on Wednesday and a 79.4% chance of a December rise; a Fed speech was scored 5.6/10 versus a 6.1/10 average, as the FXS Fed Sentiment Index held steady at 127.51. Technically, EUR/USD stayed below the 100-day SMA at 1.1450, with RSI at 39.7; resistance sat near 1.1225 and 1.1315, and support at 1.1140.
