Diverging central bank policies and elevated U.S. Treasury yields continue to weigh on EUR/USD, which trades near 1.12 after hitting 17-month lows. The ECB raised its deposit rate 25 basis points to 2.50% to address eurozone inflation near 3.3-3.8%, driven by energy prices, while the Fed holds a 3.75-4.00% target range with market pricing for additional tightening into year-end. High U.S. yields, including 30-year Treasuries above 5.6%, reinforce dollar strength, compounded by French fiscal strains and political budget risks. Upcoming U.S. CPI data and FOMC communications will shape near-term rate differentials, while eurozone growth and energy developments remain key swing factors for any sustained recovery.