EUR/USD slips to 1.1220 as a rebounding dollar halts the euro rally after the US midterms
The EUR/USD forecast has tilted back toward the greenback as the US dollar rebounds from its post-election slump. Following lower-than-expected US initial jobless claims and hawkish commentary from Federal Reserve officials, the EUR/USD pair pulled back to 1.1220 after touching an intraday peak of 1.1268.
⚡ Key numbers:
- 1.1220 – EUR/USD trading level following retreat from an intraday high of 1.1268
- 101.60 – US Dollar Index (DXY) rebound mark after bottoming at 101.20
- 4% – Eurozone inflation rate noted by Commerzbank as ECB rate hike prospects persist
- -3.16% – drop in the S&P 500 index to 7,446 points amid post-election repositioning
Dollar regains footing following post-election slide
The US dollar staged a steady recovery on Thursday after sliding to five-week lows in the immediate wake of the US midterm elections. The Democratic takeover of both chambers of Congress initially prompted expectations of restrained fiscal spending, which dragged Treasury yields lower. The US Dollar Index (DXY) traded near 101.60, lifting off from its session low of 101.20.
The greenback's resurgence halted the euro's upward momentum. After testing resistance around 1.1268 earlier in the session, the EUR/USD pair drifted back toward 1.1220. On Wall Street, the S&P 500 was down 3.16% at 7,446 points on Thursday afternoon.
Resilient labor data and hawkish Fed rhetoric reinforce rate bets
A supportive economic backdrop provided the catalyst for the greenback's revival. US initial jobless claims came in lower than anticipated, signaling enduring strength across the domestic labor market.
Federal Reserve officials reinforced expectations of a December rate hike with pointed remarks on inflation. Cleveland Fed President Beth Hammack stated that "monetary policy needs to move to a restrictive stance" because inflation remains "too high, moving in the wrong direction." Richmond Fed President Thomas Barkin similarly remarked that a gradual pace of increases makes sense, naming inflation as the central bank's primary concern.
“I do not anticipate inflation will accelerate, but also don’t see it falling at this point”
— Thomas Barkin, Richmond Federal Reserve President (via FXStreet)
Eurozone pressures and upcoming payrolls test rate path
On the European front, traders continue to price in further tightening by the European Central Bank as producer prices accelerate and Eurozone inflation hovers near 4%. While institutional developments, including succession discussions at the ECB, keep market participants alert, monetary policy divergence remains in the spotlight.
Global market attention now pivots directly to Friday's Nonfarm Payrolls (NFP) release. The employment report is anticipated to provide fresh signals on labor demand, determining whether the Federal Reserve will proceed with tighter borrowing costs into year-end.
What to watch next
- Friday release of the US Nonfarm Payrolls (NFP) employment report
- Statements from European Central Bank policymakers regarding December rate decisions
- Congressional developments regarding fiscal policy and overseas funding under the new majority
Frequently asked questions
What shifted the EUR/USD forecast on Thursday?
A drop in US jobless claims combined with hawkish remarks from Fed officials revived demand for the dollar, halting the euro's post-election advance.
Where is EUR/USD trading after the US midterm results?
EUR/USD hovers near 1.1220 after peaking at 1.1268 earlier on Thursday.
Are further Fed rate hikes still expected?
Yes, remarks from Fed officials highlighting persistent inflation have reinforced market expectations of a gradual rate hike in December.
Sources: FXStreet, Comparic, Bankier.pl, Forsal, Yahoo Finance.
Disclaimer: This article is for information purposes only and does not constitute investment advice. Data as of Nov 5, 2026, 22:11 may vary by source. Trading leveraged CFDs carries a high risk of losing money.
This article contains AI-generated content.
