EUR/USD trades near 1.12 in mid-October 2026, pressured by a widening interest-rate differential that favors the dollar. The Federal Reserve’s September hike to a 3.75–4.00% target range, combined with market pricing for a potential December increase, has lifted Treasury yields well above Bunds, while the ECB’s deposit rate sits at 2.50% with officials signaling limited near-term tightening. Persistent euro-area concerns, particularly France’s widening fiscal spreads and political uncertainty ahead of 2027 elections, weigh on the euro. Upcoming US CPI data and central-bank speeches this week represent key near-term catalysts that could shift rate expectations and volatility around key levels such as 1.10 or 1.13.