On Thursday, EUR/USD continued to strengthen for the second consecutive session, consolidating near the upper boundary of its current trading range.

The US dollar is trading near the October low reached the previous day.

Republicans and Democrats appear unable to reach an agreement on fiscal policy following the midterm elections, increasing concerns about a potential political deadlock. Such an outcome could lead to restrictions on government spending and slower economic growth. In addition, expectations of an imminent resolution to the conflict with Iran have driven oil prices lower, which, in turn, has eased inflation expectations and triggered a further decline in US Treasury yields.

These factors outweigh expectations of interest rate hikes by the US Federal Reserve and continue to put pressure on the dollar, thereby supporting the upward movement in EUR/USD.

Meanwhile, data released on Wednesday showed that the eurozone's annual inflation rate reached 4.0% in October, its highest level in three years. This strengthened expectations of a 25-basis-point interest rate hike by the European Central Bank in December, supporting the single European currency and contributing to bullish sentiment toward EUR/USD.

However, concerns about rising French government debt and political instability could limit the pair's further upward potential, preventing bulls from becoming too aggressive.

From a technical perspective, EUR/USD is trading slightly below the 200-period simple moving average (SMA) on the 4-hour chart. Despite the pullback, however, bulls remain focused on breaking above 1.1267, the upper boundary of the trading range established over the past month. Momentum indicators confirm the positive short-term outlook: the Relative Strength Index (RSI) remains in bullish territory, while the MACD line is also in positive territory, indicating that buyers remain in control.

Nevertheless, failure to break above the aforementioned resistance level could indicate weakening bullish momentum and trigger a correction in EUR/USD toward 1.1200 and lower. Consolidation below this level would open the way toward the lower boundary of the trading range at 1.1100–1.1110. A decisive break below this zone would provide a signal for bears and create conditions for the continuation of the downward trend that has been developing over the past two months.

The table below shows the current percentage change in the US dollar's exchange rate against the major global currencies. The US dollar has recorded its largest gain against the Australian dollar.