EUR/USD trades near 1.120 amid a widening policy-rate differential that favors the dollar, with the Federal Reserve holding a federal funds target range of 3.75–4.00% versus the ECB deposit rate at 2.50%. Markets price additional Fed tightening by year-end as U.S. inflation remains elevated and labor data stay resilient, while the ECB confronts sticky services prices and energy-cost pressures that have lifted euro-area CPI. French fiscal strains and wider sovereign spreads add downside risk to the euro, reinforcing the recent decline of roughly 3.5% over the past year. Key upcoming catalysts include the October 28–29 central-bank meetings, U.S. CPI and retail-sales releases, and any shifts in oil prices that could alter inflation trajectories on both sides of the Atlantic.