EUR/USD Movement Overview
The euro stayed on the defensive against the US dollar, with EUR/USD trading near 1.1125 as of 09:46 UTC+8 on 28 October 2026. The pair extended its losses for a fifth consecutive day on Tuesday 27 October as traders positioned ahead of back-to-back Federal Reserve and European Central Bank decisions. The euro is on track to be the worst-performing developed-market currency in October.
Key Driver Behind The Move
The euro underperformed across the board on concerns over France’s public finances, while a firmer dollar added pressure. The dollar regained ground as last week’s AI-related worries subsided, allowing traders to refocus on the Fed’s interest rate outlook.
Market Data And Reaction
The US Dollar Index, which tracks the dollar against a basket of six major currencies, traded around 102.20, near a two-week high. Traders will watch whether the Fed’s policy statement and Chair Kevin Warsh’s comments reinforce or temper expectations of a December rate hike, currently priced at around 80% according to the CME FedWatch tool. Inflation remains above the Fed’s target and Middle East risks are lingering.
Broader Market Implications
The ECB’s caution contrasts with firm Fed expectations. Brown Brothers Harriman said the ECB has room to wait, but that a December hike remains a live prospect. It expects French bond market turmoil to dominate ECB President Christine Lagarde’s press conference. It said reassurance on contagion could cushion the euro, but that France’s fiscal troubles leave EUR/USD vulnerable to a drop toward 1.1000.
What Forex Traders Should Watch
- The Fed’s decision at 02:00 UTC+8 on 29 October 2026, and Warsh’s press conference at 02:30 UTC+8.
- US third-quarter GDP and PCE inflation data at 20:30 UTC+8 on 29 October 2026.
- The ECB’s decision at 21:15 UTC+8 on 29 October 2026, followed by Lagarde’s press conference.
- Developments in French bond markets.
