EUR/USD Approaches Four-Week Range High as Dollar Selling Intensifies

Traders' Opinions

Summary:

EUR/USD rallies more than 0.6% toward 1.1280 as Eurozone inflation accelerates to 4% and Democratic control of Congress puts pressure on the US Dollar and Treasury yields.

BUY EURUSD

EXP

TRADING

1.12470

Entry Price

1.14500

1.11000

1.12175 +0.00273 +0.24%

0.0

Pips

Flat

1.11000

Exit Price

1.12470

Entry Price

1.14500

EUR/USD gained momentum on Wednesday, rising more than 0.6% to approach the 1.1260–1.1280 resistance region as two developments strengthened demand for the Euro. Higher-than-expected Eurozone inflation reinforced expectations that the European Central Bank may need to maintain its restrictive monetary stance, while the Democrats’ decisive victory in the US midterm elections triggered renewed selling pressure on the Dollar. The combination has given the pair room to extend its recovery toward the upper boundary of its recent trading range.

Eurozone inflation provided a significant boost to the single currency. Preliminary Harmonized Index of Consumer Prices data showed annual inflation accelerating to 4% in October, up from 3.8% in September and marking its highest reading in three years. Rising energy costs were identified as a key contributor to the increase, creating another challenge for policymakers as they assess the inflation outlook. The figures have strengthened the argument for further monetary tightening in the coming months, helping offset disappointment from the downward revision to the October HCOB Services PMI.

The Dollar, meanwhile, has struggled to attract buyers following the Democratic Party’s strong performance in Tuesday’s elections. Democrats secured control of both chambers of Congress, with traditional Republican strongholds including Kansas and Texas also shifting in their favor. The result has raised concerns among investors about potential regulatory pressure on the artificial intelligence sector and the possibility of restrictions affecting planned data centre investments. These concerns have weighed on technology shares while encouraging demand for government bonds.

The political outcome is also influencing expectations surrounding US fiscal policy and Treasury yields. Rabobank analysts note that markets have interpreted Democratic control of Congress as a development that could mean fewer fiscal giveaways and consequently less inflationary pressure. That outlook could translate into lower Treasury yields, reducing the Dollar’s relative appeal. With Eurozone inflation moving higher at the same time that US yields face potential downward pressure, the policy and yield backdrop has become more supportive of EUR/USD. The pair’s ability to establish a sustained position above 1.1260–1.1280 will be important in determining whether the latest rally develops into a broader upward move.

Technical Analysis

EUR/USD is showing a notable bullish recovery on the H4 chart after finding strong buying interest around the 1.1115–1.1135 support zone. The pair has since established a sequence of higher lows and higher highs, suggesting that buyers are gradually regaining control after the prolonged decline from the September highs. The latest upward impulse has brought price toward the 1.1230–1.1245 resistance area, which is now the immediate barrier to further appreciation.

The reaction around 1.1245 will be particularly important. A sustained H4 close above this resistance zone would strengthen the bullish breakout structure and potentially open the way toward 1.1350–1.1360. If momentum continues beyond that region, the next major upside target sits around 1.1450. A brief retest of the 1.1220–1.1230 area could also provide an opportunity for buyers to establish fresh positions, provided the former resistance holds as support.

The broader recovery remains constructive while EUR/USD stays above the 1.1180–1.1190 region. However, failure to secure a breakout above 1.1245 could result in temporary consolidation or a deeper pullback toward that lower support area. The recent bullish momentum favors buyers, but confirmation above the immediate resistance remains important before expecting an extended move higher.

TRADE RECOMMENDATION

BUY EUR/USD

ENTRY PRICE: 1.1247

STOP LOSS: 1.1100

TAKE PROFIT: 1.1450

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Risk Disclosure

The risk of loss in trading financial instruments such as stocks, FX, commodities, futures, bonds, ETFs and crypto can be substantial. You may sustain a total loss of the funds that you deposit with your broker. Therefore, you should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources.

No decision to invest should be made without thoroughly conducting due diligence by yourself or consulting with your financial advisors. Our web content might not suit you since we don't know your financial conditions and investment needs. Our financial information might have latency or contain inaccuracy, so you should be fully responsible for any of your trading and investment decisions. The company will not be responsible for your capital loss.

Without getting permission from the website, you are not allowed to copy the website's graphics, texts, or trademarks. Intellectual property rights in the content or data incorporated into this website belong to its providers and exchange merchants.

Recent Searches

Top Searches

Markets

Analysis

User

24/7

Economic Calendar

Education