EUR/USD breaks below 1.1110 as U.S. inflation strengthens the dollar
EUR/USD continues to decline on November 12, trading around 1.1080 and reaching its lowest levels since spring 2025 after breaking out of the 1.1110–1.1260 consolidation range. On the 1D chart, the pair is consolidating below the lower boundary of this range, which indicates increased selling pressure and raises the likelihood of a further downward move.
1.1073
1.1251
U.S. inflation reinforces expectations of Fed tightening
The main factor behind the euro's weakness remains the strengthening of the U.S. dollar following the release of higher-than-expected U.S. inflation figures on November 10. The October Consumer Price Index rose 0.4% month over month, compared with a forecast of 0.3%, while the core index increased 0.3%, confirming persistent inflationary pressure.
Additional influence came from comments by Federal Reserve official Christopher Waller, who supported a 25-basis-point rate hike in December and did not rule out more aggressive tightening if core inflation remains elevated. As a result, the market currently estimates the probability of a 25-basis-point rate increase at approximately 88–91%, while the remaining probability is assigned to a 50-basis-point hike.
Treasury yields widen the gap with German bonds
Developments in the bond market provide additional support for the dollar. The yield on 10-year U.S. Treasuries remains around 4.99% on November 12, while the two-year yield has risen to approximately 4.76%. Meanwhile, the yield on 10-year German government bonds has declined to 3.29%, widening the spread between U.S. and German bond yields to approximately 170 basis points.
This divergence supports the attractiveness of dollar-denominated assets and limits the potential for a EUR/USD recovery, even during periods of improved risk appetite. Today, investors await the release of weekly U.S. jobless claims data, speeches by Fed officials, and the results of the 30-year Treasury bond auction. The next important event will be the release of October's Producer Price Index on November 13, which will provide further insight into inflationary pressures and the Fed's December policy decision.
Key support could trigger a short-term rebound
Following the break below support around 1.1110, the EUR/USD outlook has deteriorated significantly. However, the pair has declined toward a relatively strong support level, from which a rebound toward 1.1110–1.1130 is possible. A break below the current support, as noted in EUR/USD faces renewed selling pressure as U.S. inflation boosts Fed rate hike expectations, would lead to a decline toward 1.1000.
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