EUR/USD Near a 17-Month Low. Is 1.10 Next?

The euro is running out of support.

EUR/USD has slipped toward 1.1180, leaving the pair close to its lowest level in 17 months as a stronger dollar and renewed concerns over Europe's fiscal outlook weigh on the currency.

The dollar, meanwhile, recently climbed to an 18-month high, supported by elevated Treasury yields, safe-haven demand and expectations that U.S. interest rates could stay higher for longer.

Why the Euro Is Under Pressure

Part of the problem is coming from Europe itself.

Concerns over France's fiscal position have returned, adding another layer of uncertainty for the euro just as higher energy costs threaten to complicate the region's inflation and growth outlook.

At the same time, the U.S. side of the equation remains difficult to ignore. Oil prices have reignited inflation concerns, while elevated Treasury yields continue to make the dollar relatively attractive.

That combination has pushed EUR/USD from above 1.12 back toward the recent lows.

Could CPI Change the Story?

Wednesday's U.S. CPI report is now the next major test.

A hotter-than-expected reading could strengthen expectations that the Fed will keep policy tight, potentially giving the dollar another boost and putting 1.11 — and eventually 1.10 — into focus for EUR/USD.

A softer reading could offer the euro some breathing room, particularly if Treasury yields retreat alongside the dollar.

For EUR/USD, the pressure is clear. But with the dollar already near an 18-month high, CPI may decide whether this move has another leg — or has simply gone too far, too fast.