Bank of America Global Research on the USD outlook into next week's FOMC meeting.

"There is downside risk to our YE forecast of 1.15 for EUR/USD, given the worsening backdrop for France. As a reminder, our estimates imply every 10bp wider in OAT-Bund spreads is associated with 0.4% weaker EUR/USD (conditioned upon large moves)," BofA notes.

However, we do not see USD as the best risk-reward EUR short: 1) US data is very resilient but better priced – we think the Fed should hike next week but if it doesn’t, credibility concerns could resurface and restrain USD upside; 2) the intense focus on AI risks clouds the outlook for USD – equity sell-offs should be USD positive but less so if narrowly driven by technology stocks 3) USD longs must consider impending negative seasonality in December," BofA adds.