Dollar Rangebound Ahead of Midterms: EUR/USD Near a 17-Month Low as France Outlook Cut Adds Pressure

A market holding its breath

The dollar and other major currencies opened the week in a holding pattern on Monday, as investors turned their attention to a US midterm election that could shift the balance of power in Congress and control over the federal purse strings. Traders were bracing for a packed week dominated by the midterms, October US jobs data and central bank rate decisions in the UK, Australia, Norway and Sweden. Ahead of those events, the euro languished near a 17-month low at $1.1159 in early Asian trade, weighed down by Fitch's revision of France's outlook to "negative" from "stable" after Friday's close. Sterling was little changed at $1.3387, the dollar steadied at 101.94 against a basket of currencies, the yen eased 0.15% to 157.78 per dollar, and the Australian dollar was flat at $0.7033 ahead of Tuesday's policy decision, where the Reserve Bank of Australia is widely expected to raise its cash rate to a near two-decade high of 4.85%. The euro-to-dollar rate finished Friday at $1.1160, down 0.20%, leaving the single currency struggling for momentum.

Why the euro is the weak link

Two forces are pressing on the euro at once. First, interest-rate differentials favour the United States: the Federal Reserve held its target range at 3.75% to 4.00% on October 28, but the statement was approved by a 10–2 vote, with Lisa D. Cook and Beth M. Hammack preferring a quarter-point rise — a hawkish dissent that keeps December hike pricing alive. The European Central Bank, by contrast, held its deposit facility rate at 2.50% on October 29. MUFG expects two more ECB rate rises to support the euro, with quarter-point increases in December 2026 and March 2027 taking the deposit rate to 3.00% — but energy-driven inflation and strained bond markets, now sharpened by the France outlook cut, leave the currency's outlook unsettled. Second, the weekly forecast picture is cautious across the board: analysts describe the euro as having tried to rally at the week's open only to turn around and fall, with short-term rallies still being sold while rate differentials favour the dollar. The dollar index has stayed close to 102 for four weeks, and the October monthly candle closed just below 102 without signalling weakness — so a push higher remains possible, while a break of the October swing low points toward 100.

The levels traders are watching

Forecast ranges for the week put GBP/USD between 1.3250 and 1.3550, GBP/EUR between 1.1875 and 1.2075, and EUR/USD between 1.1050 and 1.1300. On the EUR/USD chart, sellers still control the broader trend — a sequence of lower highs and lower lows — but bulls have a clear trigger: 1.12176 is the first level that must be reclaimed before talking seriously about a recovery, with a four-hour close above it the first meaningful sign buyers are challenging the structure. If that happens and the level holds as support on a retest, the next upside levels are around 1.12693, then 1.13480, 1.14120 and 1.14956. If EUR/USD loses 1.11360, the next level to watch is 1.11053. Options expiries add gravity to the same zone: for the November 2 New York cut, $1.1150 carries €2.3 billion, $1.1175 carries €741 million, $1.1200 carries €831 million, and $1.1400 carries €1.1 billion. Big expiries do not dictate direction, but they often act as magnets into the cut — one more reason the pair may stay rangebound until the week's big events land.

The week's gauntlet: elections, banks, jobs

The calendar explains the caution. On Tuesday, November 3, Americans vote in the midterm elections, with results arriving overnight into Wednesday. Thursday brings the Bank of England's decision with a full Monetary Policy Report. Friday brings the October jobs report, with economists polled by Dow Jones expecting 55,000 jobs added and unemployment holding at 4.2% — against markets pricing roughly an 80% chance of a December rate hike. A strong payrolls print would reinforce that pricing and support the dollar; a weak one could revive easing hopes unless it raises recession alarms. One timing detail matters for traders: US clocks changed on November 1, so US releases return to their usual UK times after a week an hour earlier. In cryptocurrencies, bitcoin was up 0.22% at $77,975.62 on Monday, having fallen to a six-week low on Friday after last week's record $6.3 billion Binance heist — a reminder that the forex market's holding pattern and crypto's heist hangover are unfolding in the same risk-off week.

What it means for forex traders

For traders in Pakistan, India and Bangladesh, the week's lesson is patience over prediction. Rangebound markets punish chasing: the euro's story this week is less a forecast than a set of levels and events — 1.12176 to reclaim for bulls, 1.11360 to lose for bears, a France outlook cut already in the price, and three event risks (election, Bank of England, payrolls) that can each break the range in either direction. Position sizes should reflect that: a week with an election, a central-bank decision and a jobs report in five days is a week to risk less per trade, to wait for closes rather than wicks, and to treat forecast ranges as scenarios, not promises. The dollar has lost ground to sterling for four consecutive weeks even with a plainly hawkish Fed minority — proof that even a "strong dollar" story pauses when the calendar is this crowded.

FAQ

Why is the dollar rangebound? Traders are waiting for Tuesday's US midterm elections, Thursday's Bank of England decision and Friday's October jobs report before committing to a direction.

How low is the euro? EUR/USD traded near $1.1159 in early Asian trade Monday, a 17-month low, after Fitch cut France's outlook to "negative" from "stable".

What are the key EUR/USD levels? Bulls must reclaim 1.12176; bears need a break below 1.11360, with 1.11053 next. The forecast range for the week is 1.1050 to 1.1300.

What did the Fed and ECB do last week? The Fed held at 3.75%–4.00% on October 28 with two members dissenting in favour of a hike; the ECB held its deposit rate at 2.50% on October 29.

When is the jobs report? Friday, with 55,000 payrolls expected and unemployment at 4.2%, against roughly an 80% market-priced chance of a December rate hike.

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This article is market news and general information only, not financial advice.