EUR/USD trades near 1.119 amid persistent dollar strength driven by widening interest-rate differentials, with markets pricing more aggressive Fed tightening than ECB actions through year-end. Recent US data resilience and elevated energy prices have reinforced expectations for additional policy firming, pushing Treasury yields higher and pressuring the pair to fresh 17-month lows. Eurozone headwinds, including French fiscal and political risks that have widened bond spreads, further weigh on sentiment by raising concerns over ECB path divergence and potential contagion. Traders are watching upcoming US CPI releases and central bank communications for repricing signals, as the current rate gap remains the dominant near-term driver while structural factors like relative growth and global risk appetite add layers of uncertainty to 2026 resolution levels.