Monetary policy divergence between the Federal Reserve and European Central Bank remains the dominant driver of EUR/USD sentiment near current levels around 1.12. The Fed's recent 25-basis-point hike and market pricing for potential additional tightening through year-end, fueled by sticky inflation and resilient U.S. data, have bolstered dollar demand and Treasury yields. In contrast, the ECB's more measured approach amid Eurozone growth concerns and French fiscal pressures has limited euro support. Traders are closely watching upcoming U.S. CPI releases and central bank communications for shifts in implied rate paths, which directly influence the pair's trajectory into 2026 amid broader risk sentiment and energy price volatility.