EUR/USD sits near 1.1610, just off a one-month low, as tomorrow’s Fed decision looms as the week’s true catalyst. The ECB delivered its second hike of the year on September 10, lifting the deposit rate to 2.50% and warning that Middle East-driven inflation pressures will keep price growth well above target for an extended period. Lagarde called the move a “no-brainer”, yet the euro barely reacted; the hike had been fully priced in, and markets are already pricing more ECB tightening than the central bank’s own projections suggest is needed.
The real action lies across the Atlantic. Thursday’s hotter-than-expected US CPI print pushed September Fed hike odds sharply higher, from 67% to 88% intraday, though the dollar has struggled to fully capitalise as falling oil prices pull Treasury yields back from three-year highs near 4.99%. Adding political noise, President Trump has reportedly pressed Fed Chair Kevin Warsh directly on rate cuts, a claim Trump himself has downplayed, just as the Fed enters its blackout period ahead of Tuesday’s meeting.
The result: an ECB that has already delivered its hawkish surprise with muted market impact, against a Fed whose next move, and its independence from political pressure, could prove far more consequential for EUR/USD heading into Wednesday.
Technical Analysis of EUR/USD
As the EUR/USD chart shows, the pair has recently broken below the ascending trendline that had guided the entire late-July recovery, a genuine shift in structure, and has now also lost the 200-period EMA and the 0.382 Fibonacci confluence near 1.1580, both of which had served as reliable support during the advance. Price is currently testing the 0.5 retracement near 1.1533, a key level in its own right.
Bullish Scenario
Should buyers reclaim the 0.5 support and stage a recovery, the first real test becomes the confluence of the 200-period EMA and the 0.382 retracement near 1.1580, now flipped into resistance. A confirmed break back above that zone would open the path towards retesting the broken ascending trendline, which itself converges near the last resistance on the chart.
Bearish Scenario
Conversely, a decisive break below the 0.5 retracement would confirm the bearish structure taking hold, exposing the 0.618 level near 1.1490, precisely where the broken descending trendline now sits as a potential resistance-turned-support test on the way down. A failure to hold there would risk a deeper slide towards the 0.786 retracement near 1.1430.
With price having just lost both its ascending trendline and the 200-period EMA in quick succession, EUR/USD’s next move looks set to determine whether Wednesday’s Fed decision accelerates this correction, or gives buyers a reason to defend the 0.5 support first.
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Focus for the Euro is what occurs post the recent European Central Bank (ECB) decision. The ECB chose to increase interest rates by 25 basis points for the second time in 2022. Renewed increases in inflation, driven by rising energy prices, has policymakers focused on good policymaking. EUR/USD initially sold off on the news as investors digested the growing income risks against slowing economic conditions. Speeches from President Lagarde and many of her colleagues are due at various points today, market participants should closely follow these speeches for update on future policy decisions.
For sterling, the main event this Thursday is the Bank of England meeting. About 75% of participants expect the BoE to stand pat. In the absence of any blow-up Middle East conflict, we’ll see increased re-invigoration in demand for higher yielding assets. However, ruptures to Middle East Oil continue to grow and will further increase oil prices. Increased oil prices will lead to inflation in the UK, narrowing policy divergences between the BoE, Fed and ECB.
Fundamental bias: DXY moderately bullish, EUR neutral, GBP neutral, with this week’s Fed and BoE decisions likely to determine the next major policy divergence.
U.S. Dollar Index Technical Analysis: DXY Breaks Above $99.26 as $99.39 Comes Into Focus
EUR/USD started a correction move from the 1.1650 resistance. It faces key hurdles near 1.1635 and 1.1650 on the 4-hour chart. WTI Crude Oil prices rallied and tested $105. Gold bulls are still struggling to push prices above $4,480 and $4,500. EUR/USD Technical Analysis The Euro failed to settle above 1.1650 against the US Dollar. EUR/USD corrected some gains and traded below 1.1620 to move into a consolidation zone.
Looking at the 4-hour chart, the pair settled the 100 simple moving average (red, 4-hour) and tested the 200 simple moving average (green, 4-hour). A low was formed at 1.1569, and the pair started a consolidation phase.
On the upside, an immediate resistance could be near the 61.8% Fib retracement level of the downward move from the 1.1654 swing high to the 1.1569 low at 1.1620.
The next major resistance might be near the 100 simple moving average at 1.1635. The main hurdle could still be 1.1650. A close above 1.1650 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1720.
If there is another drop, the pair might find bids near 1.1565. The first major support could be near 1.1515. A close below 1.1515 might accelerate the decline. In the stated case, the bears could aim for a move to 1.1440.
Looking at WTI Crude Oil prices, the price remained elevated, extended gains, tested $105, and remains in a bullish zone.
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Stronger core inflation favours MUFG’s bearish Euro outlook, with the bank now expecting a September Fed hike and EUR/USD closing below 1.16. The Euro to Dollar (EUR/USD) exchange rate closed Friday near 1.1599, down 0.10% on the day, as stronger US core inflation reinforced expectations of a Federal Reserve rate increase.
MUFG's downside scenario points towards 1.14, approximately 1.7% below that close.
Before Friday's inflation release, the bank outlined two possible paths: a Fed hold alongside further ECB tightening could lift EUR/USD towards 1.20, while a September Fed hike could push it towards the bottom of its 1.14-1.18 range.
“The performance of EUR/USD may increasingly hinge on the Fed’s policy response,” MUFG’s Lee Hardman said.
Core inflation strengthens the case for a hike The August CPI release showed core prices rising 0.3% on the month, accelerating from July's 0.2% increase and exceeding the 0.2% consensus.
Headline prices rose 0.4%, with gasoline accounting for more than a third of the increase.
Annual core inflation nevertheless eased to 2.4% from 2.5%, making this a setback in monthly momentum rather than an acceleration across every measure.
Market estimates put the probability of a September hike around 85-90% after the release.
MUFG subsequently changed its own Fed forecast:
“As a result, we now expect the Fed to hike rates by 25bps in September.”
Image: EUR/USD 48-hr chart ECB tightening still offers the Euro support Thursday's ECB decision announced a quarter-point increase in the deposit rate to 2.50%, effective from 16 September, while projecting inflation above target through 2028.
That supported the argument for further European tightening explored in our earlier EUR/USD outlook.
We believe Friday's CPI weakens the case for the Euro to benefit from an ECB tightening cycle while the Fed stands aside.
However, with a US hike already heavily anticipated, its delivery alone may offer limited additional Dollar support.
MUFG's rates strategists acknowledge that markets have already priced in much of the expected tightening and may have gone too far.
A move towards 1.14 therefore remains conditional on how the Fed's decision and guidance change expectations for subsequent meetings.
Euro Prices: This Week USDEURGBPJPYCADAUDNZDCHFUSD +0.13%-0.08%-1.75%+0.24%+0.46%+1.16%+0.79%EUR-0.13% -0.21%-1.87%+0.12%+0.33%+1.03%+0.67%GBP+0.08%+0.21% -1.67%+0.33%+0.54%+1.24%+0.88%JPY+1.78%+1.91%+1.70% +2.03%+2.24%+2.96%+2.58%CAD-0.24%-0.12%-0.33%-1.99% +0.21%+0.91%+0.55%AUD-0.46%-0.33%-0.54%-2.20%-0.21% +0.70%+0.33%NZD-1.15%-1.02%-1.23%-2.87%-0.90%-0.69% -0.36%CHF-0.79%-0.66%-0.87%-2.52%-0.54%-0.33%+0.36% The FX heat map compares how Euro (EUR) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Euro recorded its sharpest decline. Data comparing prices today (12/09/2026 12:07 UTC) and daily close on 05/09/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Stronger core inflation favours MUFG’s bearish Euro scenario, with the bank now expecting a September Fed hike and EUR/USD closing below 1.16. The Euro to Dollar (EUR/USD) exchange rate closed Friday near 1.1599, down 0.10% on the day, as stronger US core inflation reinforced expectations of a Federal Reserve rate increase.
MUFG’s downside scenario points towards 1.14, approximately 1.7% below that close.
Before Friday’s inflation release, the bank outlined two possible paths: a Fed hold alongside further ECB tightening could lift EUR/USD towards 1.20, while a September Fed hike could push it towards the bottom of its 1.14-1.18 range.
“The performance of EUR/USD may increasingly hinge on the Fed’s policy response,” MUFG’s Lee Hardman said.
Core inflation strengthens the case for a hike The August CPI release showed core prices rising 0.3% on the month, accelerating from July’s 0.2% increase and exceeding the 0.2% consensus.
Headline prices rose 0.4%, with gasoline accounting for more than a third of the increase.
Annual core inflation nevertheless eased to 2.4% from 2.5%, making this a setback in monthly momentum rather than an acceleration across every measure.
Market estimates put the probability of a September hike around 85-90% after the release.
MUFG subsequently changed its own Fed forecast:
“As a result, we now expect the Fed to hike rates by 25bps in September.”
Image: EUR/USD 48-hr chart ECB tightening still offers the Euro support Thursday’s ECB decision announced a quarter-point increase in the deposit rate to 2.50%, effective from 16 September, while projecting inflation above target through 2028.
That supported the argument for further European tightening explored in our earlier EUR/USD outlook.
We believe Friday’s CPI weakens the case for the Euro to benefit from an ECB tightening cycle while the Fed stands aside.
However, with a US hike already heavily anticipated, its delivery alone may offer limited additional Dollar support.
MUFG’s rates strategists acknowledge that markets have already priced in much of the expected tightening and may have gone too far.
A move towards 1.14 therefore remains conditional on how the Fed’s decision and guidance change expectations for subsequent meetings.
Euro Prices: This Week USDEURGBPJPYCADAUDNZDCHFUSD +0.13%-0.08%-1.75%+0.24%+0.46%+1.16%+0.79%EUR-0.13% -0.21%-1.87%+0.12%+0.33%+1.03%+0.67%GBP+0.08%+0.21% -1.67%+0.33%+0.54%+1.24%+0.88%JPY+1.78%+1.91%+1.70% +2.03%+2.24%+2.96%+2.58%CAD-0.24%-0.12%-0.33%-1.99% +0.21%+0.91%+0.55%AUD-0.46%-0.33%-0.54%-2.20%-0.21% +0.70%+0.33%NZD-1.15%-1.02%-1.23%-2.87%-0.90%-0.69% -0.36%CHF-0.79%-0.66%-0.87%-2.52%-0.54%-0.33%+0.36% The FX heat map compares how Euro (EUR) has performed against a basket of major currencies over the past week. The largest move was against the Japanese Yen, where Euro recorded its sharpest decline. Data comparing prices today (12/09/2026 12:07 UTC) and daily close on 05/09/2026.
To read the table, choose the base currency from the left-hand column and then move across to the quote currency along the top row. For example, the GBP row and USD column shows the weekly percentage move in GBP/USD.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Key Points:EUR/USD settled near the 1.1600 level as traders reacted to U.S. CPI report. GBP/USD moved higher as UK GDP exceeded analyst estimates. USD/JPY pulled back towards the 153.50 level.
In this article:EUR/USD
-0.08%
EUR/USD ForecastGBP/USD
+0.09%
GBP/USD ForecastUSD/CAD
+0.21%
USD/CAD ForecastUSD/JPY
-0.52%
USD/JPY Forecast
U.S. Dollar Attempts To Gain Ground After CPI Report
DXY 110926 4h Chart U.S. Dollar Index is swinging between gains and losses as traders focus on the CPI report. The report indicated that Inflation Rate remained unchanged at 3.4% in August, in line with analyst estimates. Core Inflation Rate decreased from 2.5% in July to 2.4% in August. The report has also met analyst expectations. I’d note that Core Inflation Rate grew by +0.3% a month-over-month basis, exceeding the analyst forecast of +0.2%.
Traders also focus on the strong pullback in the oil markets. Oil prices are down by -3.5%, which is bearish for U.S. dollar.
In case U.S. Dollar Index settles back above the 50 MA at 99.08, it will head towards the nearest resistance at 99.25 – 99.40. A move above the 99.40 level will open the way to the test of the next resistance at 99.85 – 100.00.
EUR/USD Remains Stuck Near 1.1600 EUR/USD 110926 4h Chart EUR/USD managed to rebound from session lows as traders reacted to U.S. inflation data and evaluated chances for a rate hike at the next Fed meeting. According to FedWatch Tool, the probability of a rate hike has increased to 86.7%.
If EUR/USD settles back above the support level at 1.1600 – 1.1615, it will head towards the resistance at 1.1685 – 1.1700. On the support side, a move below 1.1570 will open the way to the test of the support at 1.1500 – 1.1515. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
GBP/USD Moves Higher As UK GDP Exceeds Estimates GBP/USD 110926 4h Chart GBP/USD gains ground as traders focus on GDP report from the UK. The report indicated that GDP increased by +0.4% month-over-month in July, compared to analyst forecast of 0%.
Traders also had a chance to take a look at Industrial Production and Manufacturing Production report. UK Industrial Production increased by +0.2% month-over-month in July, while Manufacturing Production grew by +0.9%. Both reports exceeded analyst estimates.
Currently, GBP/USD is trying to settle above the 50 MA at 1.3524. In case this attempt is successful, GBP/USD will head towards the resistance at 1.3550 – 1.3565. A move above the 1.3565 level will push GBP/USD towards the next resistance at 1.3635 – 1.3650.
USD/CAD Tests New Highs As Rebound Continues
USD/CAD 110926 4h Chart USD/CAD gained ground despite the rebound in precious metals markets. Other commodity-related currencies managed to gain ground in today’s trading session.
USD/CAD climbed above the 1.3850 level and made an attempt to settle above 1.3880. In case USD/CAD climbs above 1.3880, it will move towards the resistance level at 1.3900 – 1.3915. On the support side, a successful test of the support at 1.3825 – 1.3840 will open the way to the test of the next support at 1.3750 – 1.3765.
USD/JPY Retreats As Traders Stay Bearish USD/JPY 110926 4h Chart USD/JPY pulled back as traders bet on hawkish BoJ and ignored the risks of a rate hike in the U.S. Treasury yields were mixed in today’s trading session. The yield of 10-year Treasuries climbed above the 4.61% level, while the yield of 10-year Treasuries pulled back towards 4.95%.
The nearest support level for USD/JPY is located in the 152.50 – 153.00 range. If USD/JPY declines below the 152.50 level, it will head towards the next support at 149.50 – 150.00.
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The EUR/USD edged lower this morning, down for the second day, ahead of the release of US CPI. The pair has been consolidating in a tight range, and yesterday’s hawkish rate hike from the ECB failed to deliver the breakout many traders were hoping to get. With the US dollar finding renewed support in recent days, the risk to the near-term EUR/USD forecast is tilted to the downside.
Before discussing the upcoming CPI report, as well as other macro factors influencing the EUR/USD, let’s a have a quick look at the chart first.
Technical EUR/USD forecast and key levels to watch
From a technical analysis point of view, the EUR/USD forecast hangs in the balance as the pair continues to consolidate inside a triangle, but the balance of risks remain tilted to the downside because of the energy situation. Key support comes in between 1.1560ish to 1.1580ish. Break that region and then a revisit of 1.1500 could be on the cards next. Resistance meanwhile comes in around 1.1635/40 area. Here, the resistance trend of the triangle pattern meets the 200-day average and the highs of the last several days. Break that and 1.1700 could be the next stop.
Source: TradingView.com
A lot will now depend on the direction of oil prices and bond yields, which are starting to provide some support for the dollar.
Dollar finds renewed support ahead of CPI
The dollar is beginning to find its footing again as the relationship between the currency and long-dated Treasury yields starts to reassert itself. The shift has come against a backdrop of rising oil prices, firmer inflation expectations and renewed pressure in the bond market.
The US Treasury’s latest buyback programme offers an important clue. Although the headline announcement was for $6bn, only $5.19bn was ultimately conducted. That relatively modest intervention suggests Treasury Secretary Scott Bessent remains wary of trying to lean too heavily against the bond market. A more conventional relationship between higher long-end yields and a stronger currency is easier to sustain if investors do not expect Washington to suppress borrowing costs aggressively.
The next test comes with today’s CPI report. Markets expect headline inflation to rise 0.4% month on month in August, taking the annual rate to 3.4%, while core CPI is expected to ease slightly to 2.4%
After a stronger-than-expected PPI reading, the risks are no longer quite as symmetrical. A benign CPI report would give investors some relief, particularly in equities, but a meaningful upside surprise could have a much larger market impact. With oil back above $100 a barrel and Treasury yields rising, evidence that inflation is proving sticky would make the prospect of easier monetary policy considerably harder to defend.
That leaves the Federal Reserve in a difficult position. Chair Kevin Warsh has set a relatively high bar for incoming data to overturn the current hawkish tone, although Christopher Waller has suggested that continued improvement in inflation could remove the need for a September move. Much has changed since those comments, however, with oil prices surging in recent days.
A weaker CPI reading would therefore probably hurt the dollar, but it may not be enough to unwind the broader repricing of Fed policy.
The euro faces a different problem
The ECB has meanwhile become more comfortable acknowledging the inflation risks coming from energy. Its latest projections were revised higher, while Christine Lagarde’s comments reinforced the impression that another rate increase remains firmly on the table.
That has changed the near-term calculus for the euro. Markets are now carrying a much larger premium for European rates, reducing the likelihood of a large drop in the EUR/USD, but much of that hawkish tone was already priced in.
But Europe remains particularly exposed to higher energy costs, and an extended period of oil above $100 would squeeze consumers and companies while leaving the ECB with less room to respond to weakening growth.
The contrast with the US is becoming increasingly important. If higher oil prices feed into US inflation while Treasury yields continue to rise, the Fed may be forced to maintain a tighter stance just as growth risks increase. That would be a much more favourable combination for the dollar.
Nordea expects further ECB increases in December and March, while Scotiabank sees scope towards 1.1700 if EUR/USD clears resistance.
The Euro to Dollar (EUR/USD) exchange rate recovered from a sharp fall below 1.1600 on Thursday as investors assessed US producer-price inflation and the European Central Bank’s latest rate increase.
At the time of writing, EUR/USD was trading around 1.1624, down 0.09% against the previous close, having rebounded from an intraday low near 1.1595.
Image: EUR/USD intraday chart showing immediate reation to the US PPI and ECB rate hike
Economists at Nordea believe the ECB has further tightening ahead, despite policymakers declining to commit to their next move.
“We maintain our baseline of two further 25bp rate hikes at quarterly intervals, with the next one in December and the second in March 2027.”
That path would take the deposit rate from 2.50% to 3.00%, providing potential support for the Euro through higher returns on euro-denominated assets.
Nordea sees more tightening behind cautious ECB language
The ECB raised its three key interest rates by 25 basis points, matching the increase Scotiabank had described as fully priced before the announcement.
Its monetary policy statement projected inflation at 3.0% this year and 2.5% in 2027, with the latter revised higher.
“We are not pre-committing to a particular rate path,” the ECB said.
Scotiabank had expected a forceful endorsement of further near-term tightening as recovering oil prices threatened broader price pressures.
Nordea reads the inflation projections as evidence that September’s increase will be followed by others.
“A very extended period of inflation above target strongly supports the case for more rate hikes.”
However, Nordea also notes that markets have moved to price a faster tightening path than its own forecast, leaving scope for those expectations to reverse if December remains the likeliest next move.
We believe that limits how much support the Euro exchange rates can draw from further hikes alone: their timing, and whether expectations move beyond what is already priced, will matter.
US inflation keeps the Dollar side of the trade unsettled
The US producer-price figures showed core prices, excluding food and energy, rose 0.2% in August, easing from July’s 0.3% increase, with annual inflation at 4.6%.
Headline prices increased 0.4% on the month and 5.4% annually as energy prices jumped 4.2%.
The slower monthly core reading offers encouragement, but persistent price pressure leaves the FED’s response an important constraint on Euro gains.
The recovery keeps Scotiabank’s case for a EUR/USD move towards 1.1700 in focus.
Its pre-release technical assessment nevertheless identified an obstacle just above current levels.
“The 200 day MA (1.1634) continues to offer resistance on a closing basis, and we continue to highlight the absence of any major resistance ahead of the local high around 1.17.”
A close above 1.1634 would strengthen the case for another attempt at 1.1700, while a renewed fall through the session’s 1.1595 low would undermine the recovery.
The strong rally in the oil markets provided additional support to the American currency.
In this article:EUR/USD
-0.13%
EUR/USD ForecastGBP/USD
-0.20%
GBP/USD ForecastUSD/CAD
+0.10%
USD/CAD ForecastUSD/JPY
+0.48%
USD/JPY Forecast
U.S. Dollar Moves Higher As Traders Focus On Producer Prices Data
DXY 100926 4h Chart U.S. Dollar Index gains ground as traders focus on the strong rally in the oil markets and react to Producer Prices data.
Brent oil rallied above the $107.00 level amid rising tensions in the Middle East. Houthis achieved victory against forces of Yemen’s official government, taking control of a key port on the Red Sea. At this point, Houthis have the ability to control shipping in the Bab el-Mandeb Strait.
PPI increased by +0.4% month-over-month in August, in line with analyst estimates. The previous report was revised from 0% to +0.1%. Core PPI grew by +0.2%, while analysts expected that it would increase by +0.3%. The previous report was revised from +0.2% to +0.3%. Due to revisions, PPI was higher than expected, which was bullish for U.S. dollar.
If U.S. Dollar Index manages to settle above the 99.00 level, it will head towards the resistance level, which is located in the 99.25 – 99.40 range.
EUR/USD Pulls Back As ECB Raises Rates EUR/USD 100926 4h Chart EUR/USD is losing ground as traders focus on the ECB Interest Rate Decision. The European Central Bank raised the rate from 2.4% to 2.65%, in line with analyst estimates.
ECB President Christine Lagarde said that the hike was “a no brainer”. ECB noted that the conflict in the Middle East generated inflationary pressure. In my opinion, ECB may raise rates at the next meeting due to the situation in the oil markets.
Currently, EUR/USD is trying to settle below the support level at 1.1600 – 1.1615. In case this attempt is successful, EUR/USD will head towards the next support, which is located in the 1.1500 – 1.1515 range.
GBP/USD Retreats As Oil Markets Rally GBP/USD 100926 4h Chart GBP/USD pulled back as demand for U.S. dollar increased amid strong rally in the oil markets. Traders bet that Fed will raise the federal funds rate next week.
If GBP/USD stays below the 50 MA at 1.3527, it will head towards the nearest support level, which is located in the 1.3470 – 1.3485 range. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in the near term.
USD/CAD 100926 4h Chart USD/CAD gained ground as traders focused on the strong pullback in precious metals markets. Gold is down by -1%, while silver markets pulled back by -4.5%. Other commodity-related currencies are also losing ground in today’s trading session.
Currently, USD/CAD is trying to settle above the resistance level at 1.3825 – 1.3840. In case USD/CAD climbs above the 1.3840 level, it will head towards the next resistance, which is located in the 1.3900 – 1.3915 range.
USD/JPY Gains Ground Amid Rising Treasury Yields USD/JPY 100926 4h Chart USD/JPY is moving higher as traders bet on hawkish Fed and focus on rising Treasury yields. The yield of 2-year Treasuries settled above the 4.54% level, while the yield of 10-year Treasuries moved above 4.91%.
The nearest resistance level for USD/JPY is located in the 155.00 – 155.50 range. if USD/JPY settles above 155.50, it will head towards the 50 MA at 156.33. A move above the 50 MA will open the way to the test of the next resistance at 158.00 – 158.50.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
Key takeaways ECB hike largely priced in: Markets widely expect the ECB to raise its deposit rate by 25 basis points to 2.50%. The bigger catalyst for EUR/USD is whether Christine Lagarde signals further tightening. Energy inflation has shifted the ECB outlook: Brent crude above US$100 and Eurozone inflation above 3% have revived hawkish policy risks. ECB-Fed divergence is critical: A hawkish ECB combined with stable Fed expectations would favour EUR/USD, while indications that the ECB is near its terminal rate alongside rising Fed hike expectations would strengthen the US dollar. EUR/USD technical structure remains constructive: The pair has reclaimed its rising 20-day MA and is moving back above the 200-day MA at 1.1623. EUR/USD is holding close to a two-week high around 1.1640 ahead of today’s European Central Bank (ECB) monetary policy decision, with markets widely expecting a 25-basis-point rate hike as policymakers respond to renewed inflation pressures from surging energy prices.
The expected move would lift the ECB’s deposit facility rate from 2.25% to 2.50%, marking its second rate hike this year after the central bank restarted tightening in June. The hike itself is largely priced in; therefore, the bigger directional catalyst for EUR/USD is likely to come from ECB President Christine Lagarde’s guidance on whether further tightening is required.
Energy shock has changed the ECB rate outlook The renewed spike in energy prices has become the dominant macro driver behind the ECB’s hawkish shift. Brent crude has moved back above US$100 per barrel, following another escalation in the US-Iran conflict and disruptions to shipping in the Middle East. Eurozone inflation is running above 3%, leaving headline inflation well above the ECB’s 2% medium-term target.
This creates an uncomfortable policy mix for the ECB. Higher oil and gas prices are simultaneously lifting inflation while threatening economic growth, leaving policymakers to decide how aggressively they should respond to what remains largely a supply-driven inflation shock.
At its July meeting, the ECB kept the deposit rate unchanged at 2.25%, while stressing that the full inflationary impact of the energy shock had yet to materialise and that it would monitor indirect and second-round effects closely. That makes today’s communication particularly important: any evidence that higher energy costs are spreading into service prices, wages or inflation expectations would strengthen the case for additional hikes.
Is this the final ECB hike? That is probably the most important question for EUR/USD.
A Reuters poll published last week showed economists broadly expecting today’s 25-basis-point hike to 2.50%, but with most forecasting that this would be the final increase in the current cycle. Eurozone growth is expected to remain relatively soft, while wage pressures have moderated, reducing the risk of another sustained wage-price spiral.
However, the balance of risks has shifted toward a more hawkish stance as the Middle East conflict has intensified.
Deutsche Bank, for example, now expects another 25-basis-point ECB hike in December, taking the potential terminal deposit rate to 2.75%, arguing that persistent energy-related inflation risks could require tighter monetary policy for longer.
This distinction matters for EUR/USD.
If Lagarde signals that 2.50% may be the peak, the euro could struggle to extend its recent gains, as today’s hike is already heavily discounted.
Conversely, language suggesting that the Governing Council remains prepared to hike again, particularly if energy inflation feeds into underlying prices, would encourage markets to price a higher ECB terminal rate, providing a potential positive catalyst for EUR/USD.
ECB-Fed rate expectations remain the key FX transmission channel EUR/USD will also trade on the relative rate outlook between the ECB and Federal Reserve, rather than the ECB decision in isolation.
The Fed currently maintains its policy rate at 3.50%-3.75%. A Reuters poll shows around 70% of economists expect the Fed to remain on hold at its 15-16 September meeting, although market pricing has become significantly more hawkish after stronger US economic data and renewed inflation concerns.
The Fed funds futures market is now assigning roughly a 62% probability of a Fed rate hike this month, with higher energy prices also creating upside risks to US inflation (see Fig. 1).
Fig. 1: CME FedWatch tool aggregated FOMC meeting outcome probabilities as of 10 Sep 2026 (Source: CME website). The information presented is historical information, and past performance is not indicative of future performance.
This sets up an important relative-rates battle for EUR/USD:
A hawkish ECB and unchanged Fed expectations suggest a positive outlook for EUR/USD.
ECB signals tightening is nearly finished, and rising Fed hike expectations suggest EUR/USD is negative.
Further ECB rate hikes priced alongside Fed rate hikes imply that EUR/USD is likely to become more sensitive to economic growth and bond-yield differentials.
Hence, tomorrow’s US CPI release could be almost as important for EUR/USD as today’s ECB meeting, because stronger-than-expected US inflation would reinforce expectations for Fed tightening and potentially widen the US-eurozone yield differential back in favour of the US dollar.
Now, let’s focus on the short-term trajectory (1 to 3 days) of the EUR/USD from a technical analysis perspective.
EUR/USD is trading back above the 200-day MA Fig. 2: EUR/USD minor trend as of 10 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance.
The recent 1.23% minor corrective decline seen in the EUR/USD from the 21 August 2026 high of 1.1712 to the 2 September 2026 low of 1.1566 may have ended.
The price action has traded back above its rising 20-day moving average since Friday, 4 September 2026, ex-post the US non-farm payroll release, and is now inching back above the key 200-day moving average (1.1623) with the current intraday level at 1.1638 at this time of writing (see Fig. 2).
These observations suggest that EUR/USD may be undergoing a new minor bullish impulsive up-move sequence.
Watch the 1.1604 short-term pivotal support to maintain the minor bullish impulsive structure, and a clearance above the 1.1654 near-term resistance targets the next intermediate resistances at 1.1680 and 1.1710 in the first step.
On the other hand, a failure to hold and an hourly close below 1.1604 negate the bullish tone, paving the way for a choppy minor corrective decline that could expose the next intermediate supports at 1.1583 and 1.1560.
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Key takeaways ECB hike largely priced in: Markets widely expect the ECB to raise its deposit rate by 25 basis points to 2.50%. The bigger catalyst for EUR/USD is whether Christine Lagarde signals further tightening.Energy inflation has shifted the ECB outlook: Brent crude above US$100 and Eurozone inflation above 3% have revived hawkish policy risks.ECB-Fed divergence is critical: A hawkish ECB combined with stable Fed expectations would favour EUR/USD, while indications that the ECB is near its terminal rate alongside rising Fed hike expectations would strengthen the US dollar.EUR/USD technical structure remains constructive: The pair has reclaimed its rising 20-day MA and is moving back above the 200-day MA at 1.1623. EUR/USD is holding close to a two-week high around 1.1640 ahead of today’s European Central Bank (ECB) monetary policy decision, with markets widely expecting a 25-basis-point rate hike as policymakers respond to renewed inflation pressures from surging energy prices.
The expected move would lift the ECB’s deposit facility rate from 2.25% to 2.50%, marking its second rate hike this year after the central bank restarted tightening in June. The hike itself is largely priced in; therefore, the bigger directional catalyst for EUR/USD is likely to come from ECB President Christine Lagarde’s guidance on whether further tightening is required.
Energy shock has changed the ECB rate outlook The renewed spike in energy prices has become the dominant macro driver behind the ECB’s hawkish shift. Brent crude has moved back above US$100 per barrel, following another escalation in the US-Iran conflict and disruptions to shipping in the Middle East. Eurozone inflation is running above 3%, leaving headline inflation well above the ECB’s 2% medium-term target.
This creates an uncomfortable policy mix for the ECB. Higher oil and gas prices are simultaneously lifting inflation while threatening economic growth, leaving policymakers to decide how aggressively they should respond to what remains largely a supply-driven inflation shock.
At its July meeting, the ECB kept the deposit rate unchanged at 2.25%, while stressing that the full inflationary impact of the energy shock had yet to materialise and that it would monitor indirect and second-round effects closely. That makes today’s communication particularly important: any evidence that higher energy costs are spreading into service prices, wages or inflation expectations would strengthen the case for additional hikes.
Is this the final ECB hike? That is probably the most important question for EUR/USD.
A Reuters poll published last week showed economists broadly expecting today’s 25-basis-point hike to 2.50%, but with most forecasting that this would be the final increase in the current cycle. Eurozone growth is expected to remain relatively soft, while wage pressures have moderated, reducing the risk of another sustained wage-price spiral.
However, the balance of risks has shifted toward a more hawkish stance as the Middle East conflict has intensified.
Deutsche Bank, for example, now expects another 25-basis-point ECB hike in December, taking the potential terminal deposit rate to 2.75%, arguing that persistent energy-related inflation risks could require tighter monetary policy for longer.
This distinction matters for EUR/USD.
If Lagarde signals that 2.50% may be the peak, the euro could struggle to extend its recent gains, as today’s hike is already heavily discounted.
Conversely, language suggesting that the Governing Council remains prepared to hike again, particularly if energy inflation feeds into underlying prices, would encourage markets to price a higher ECB terminal rate, providing a potential positive catalyst for EUR/USD.
ECB-Fed rate expectations remain the key FX transmission channel EUR/USD will also trade on the relative rate outlook between the ECB and Federal Reserve, rather than the ECB decision in isolation.
The Fed currently maintains its policy rate at 3.50%-3.75%. A Reuters poll shows around 70% of economists expect the Fed to remain on hold at its 15-16 September meeting, although market pricing has become significantly more hawkish after stronger US economic data and renewed inflation concerns.
The Fed funds futures market is now assigning roughly a 62% probability of a Fed rate hike this month, with higher energy prices also creating upside risks to US inflation (see Fig. 1).
Fig. 1: CME FedWatch tool aggregated FOMC meeting outcome probabilities as of 10 Sep 2026 (Source: CME website). The information presented is historical information, and past performance is not indicative of future performance. This sets up an important relative-rates battle for EUR/USD:
A hawkish ECB and unchanged Fed expectations suggest a positive outlook for EUR/USD.
ECB signals tightening is nearly finished, and rising Fed hike expectations suggest EUR/USD is negative.
Further ECB rate hikes priced alongside Fed rate hikes imply that EUR/USD is likely to become more sensitive to economic growth and bond-yield differentials.
Hence, tomorrow’s US CPI release could be almost as important for EUR/USD as today’s ECB meeting, because stronger-than-expected US inflation would reinforce expectations for Fed tightening and potentially widen the US-eurozone yield differential back in favour of the US dollar.
Now, let’s focus on the short-term trajectory (1 to 3 days) of the EUR/USD from a technical analysis perspective.
EUR/USD is trading back above the 200-day MA Fig. 2: EUR/USD minor trend as of 10 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. The recent 1.23% minor corrective decline seen in the EUR/USD from the 21 August 2026 high of 1.1712 to the 2 September 2026 low of 1.1566 may have ended.
The price action has traded back above its rising 20-day moving average since Friday, 4 September 2026, ex-post the US non-farm payroll release, and is now inching back above the key 200-day moving average (1.1623) with the current intraday level at 1.1638 at this time of writing (see Fig. 2).
These observations suggest that EUR/USD may be undergoing a new minor bullish impulsive up-move sequence.
Watch the 1.1604 short-term pivotal support to maintain the minor bullish impulsive structure, and a clearance above the 1.1654 near-term resistance targets the next intermediate resistances at 1.1680 and 1.1710 in the first step.
On the other hand, a failure to hold and an hourly close below 1.1604 negate the bullish tone, paving the way for a choppy minor corrective decline that could expose the next intermediate supports at 1.1583 and 1.1560.
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
The Euro (EUR) trades in a tight range at around 1.1640 against the US Dollar (USD) during the European trading session on Thursday. The major currency pair consolidates as investors await the European Central Bank’s (ECB) monetary policy decision, which will be announced at 12:15 GMT.
In the policy meeting, the ECB is widely anticipated to hike its Deposit Facility Rate by 25 basis points (bps) to 2.5%. Firm ECB interest rate hike expectations underscore the monetary policy statement and President Christine Lagarde’s press conference as key triggers for the euro’s next move.
Analysts at Danske Bank expect the ECB to deliver another modest tightening step at its upcoming meeting, noting that “in the euro area, the ECB will announce its deposit rate” and that “we expect the ECB to raise policy rates by 25bp, bringing the deposit rate to 2.50%, in line with consensus and market pricing.” They anticipate that President Lagarde will “retain full optionality over the future rate path and provide no firm guidance,” stressing that they “do not expect Lagarde to rock the boat materially, but keeping all options open, which should limit the market reaction in our view.”
On the US Dollar front, investors await the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT. The US headline PPI is expected to come in higher at 5.3% Year-on-Year (YoY) from 4.7% in July. The core PPI – which excludes volatile food and energy items – rose by 4.6% YoY, stronger than the previous reading of 4.2%.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1637. The pair maintains a near-term bullish bias as price holds above the 20-day exponential moving average (EMA) at 1.1609, suggesting underlying demand remains intact. The Relative Strength Index (RSI) around 58 keeps a positive tilt without yet signaling overbought conditions, hinting that buyers still have some room to extend the advance while the short-term trend stays constructive.
On the downside, initial support is provided by the 20-day EMA at 1.1609, and a daily close below this level would ease the current bullish pressure and open the door to a deeper corrective pullback. As long as EUR/USD defends this moving average on closing bases, the broader technical structure favors further consolidation with an upside bias, with any dips likely to attract fresh buying interest rather than signaling a decisive trend reversal.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator ECB Rate On Deposit Facility One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.
Commerzbank’s Michael Pfister notes that markets fully price today’s ECB rate hike and see around 85 basis points of additional tightening by mid-2027, heavily driven by Oil dynamics. He argues this leaves little room for the ECB to meet expectations, making a clearly hawkish surprise necessary for Euro strength, while any disappointment could weigh on EUR/USD.
High expectations constrain euro upside"There is little doubt that the ECB will announce its second interest rate rise of the year today. This outcome is priced in at 100%, and almost all of the economists surveyed by Bloomberg (including ours) are expecting it. The actual interest rate decision is thus likely to be of virtually no significance for the euro."
"The recent rise in oil prices has led to expectations of more than two further interest rate rises by the middle of next year (with a total increase of 85 basis points priced in), with an additional 25 basis points being priced in over the last week alone. As we have often pointed out, expectations of ECB interest rate rises depend heavily on the oil price. But these high expectations are making it increasingly unlikely that the ECB will be able to meet them."
"Even if the ECB and its president, Christine Lagarde, were intent on delivering so many interest rate rises (which would already be ambitious), officials would certainly not want to commit to this today. Instead, they are likely to wait and see how the situation in the Middle East develops and what further price pressures lie ahead. In short, achieving a positive outcome for the euro is likely to be very difficult."
"The risks are thus rather asymmetrically distributed today: for a stronger euro, the ECB would have to adopt a very hawkish stance, whereas for a weaker euro, it would only need to disappoint the market's advanced expectations."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
DXY struggles despite higher Treasury yields as traders await U.S. PPI and the ECB decision, while EUR/USD and GBP/USD hold bullish support.
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EUR/USD ForecastDollar Index Outlook: Dollar Struggles as ECB Hike Looms and Oil Shock Lifts Global Inflation Risk The U.S. dollar remains flat amid higher treasury yields driven by soaring energy costs. With Brent crude topping $100, worries of inflation across the globe are coming back, with the U.S. 10-year yield climbing to a 2023 high. That said, the dollar has remained unchanged, demonstrating lack of interest from investors to add long positions before the release of the upcoming US inflation data and next week’s FOMC meeting.
The U.S. data on tap to influence markets is the Producer Price Index (PPI) today and Consumer Price Index (CPI) on Friday. The market currently puts odds at around 60% that the Fed may hike at its next meeting on Wednesday, following strong labor market data and increased energy shock. The energy crisis may also bring inflation concerns to investors, while the data may be weaker and may even lead market analysts to turn less hawkish.
The euro zone also remains front and center. The ECB is going to hike rates by 25 bps today and mail the deposit rate at 2.50%. The consensus in the market is that the ECB will not hike again this year. Euro zone inflation was at 3.3% in August, and pressure on energy prices is building, with Deutsche Bank calling for a December rate hike.
Sterling remains subdued. The Bank of England is more cautious than its peers. There is a high consensus in the market that the BoE will hold rates on September 17. 57 of the economists polled in the REUTERS survey expect the BoE to hold for the remainder of the year. Energy concerns are high, and wage and price inflation are still muted.
As indicated in the chart, tightening by the ECB contrasts with the Fed’s data dependency and the BoE’s wait-and-see approach.
Fundamental bias: DXY neutral-to-bearish, EUR moderately bullish, GBP neutral.
U.S. Dollar Index Technical Analysis: DXY Stays Below 98.90 as Sellers Keep Control Dollar Index Price Chart – Source: Tradingview On the 2-hour chart, USDX resides around 98.74, and what captures my interest is that price respects the descending trendline and remains below both moving averages. Price failed to close above 98.90 more than once, implying that there are sellers defending rebounds from forming a meaningful trend reversal.
First, I watch 98.60. A break of the support zone would take price down to 98.46 and 98.28. 98.90 becomes the first zone of resistance, and price would be considered bullish if it were to break that zone. 99.05 and 99.21 become important zones of resistance should the bulls control price action.
RSI remains in territory implying price action remains weak. I am therefore leaning bearish until 98.90 is successfully challenged and USDX is above 99.05. Closing above 99.21 would then negate this bearish thesis. Until then I favor price action moving down to 98.60.
GBP/USD Technical Analysis: Sterling Holds Above 1.3526 as Rising Trendline Supports Recovery GBP/USD Price Chart – Source: Tradingview GBP/USD is currently trading at 1.3551 on the 2 hour frame. What I have noted is that pound buyers are defending the rising trendline and keeping the price above the 1.3526 support area. The pair is also trading sideways around the moving averages which indicates that the recovery is holding and has some base, however, there is not much recovery momentum.
The first resistance is around 1.3565. A break above that would open 1.3599 and further areas at 1.3623 and the resistance area at 1.3654. For now, the 1.3526 area is the main support. Below that there are supports at 1.3504 and 1.3475 for now, but these would be more important if the pound buyers were to lose control.
I am still slightly bullish as it is trading around the 1.3526 support area and the rising trendline. A break below 1.3475 would require me to distract from the long bias, whereas a break above 1.3565 would justify a stronger bullish view.
EUR/USD Technical Analysis: Euro Holds Rising Trendline as 1.1642 Breakout Comes Into Focus EUR/USD Price Chart – Source: Tradingview EUR/USD is trading at 1.1638 on the two-hour chart. Price is building higher lows within the rising trendline and is trading above both moving averages. The structure is there, but buyers trading within this pattern need to clear 1.1642 in order to continue the upward trend.
I’m watching the first resistance level on the chart at 1.1642. A break above this level would show the next resistance levels at 1.1660, 1.1679, and 1.1700. Potential support levels in the event a rising trendline is broken and the price begins to drop are 1.1607, 1.1586, and 1.1566 in that order.
The RSI is trending in the upper half of its range meaning there is a bullish bias. I am bullish and will maintain this position as long as EUR/USD is above 1.1607. A sustained 2 hour candle break above 1.1642 would support the next level of potential resistance at 1.1660 and 1.1679. A break below 1.1586 would discount the resistance levels above.
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Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.
Danske Research Team expects the European Central Bank (ECB) to raise its deposit rate by 25bp to 2.50%, in line with consensus and market pricing, while President Lagarde is expected to retain full optionality on future moves. They note that EUR/USD edged slightly higher alongside longer US Treasury yields after the Treasury announced a USD 6bn long-end bond buyback operation, with markets also looking ahead to US Producer Price Index (PPI) data.
ECB hike and Euro reaction focus"In the euro area, the ECB will announce its deposit rate. We expect the ECB to raise policy rates by 25bp, bringing the deposit rate to 2.50%, in line with consensus and market pricing. We expect Lagarde to retain full optionality over the future rate path and provide no firm guidance, which should limit the market reaction."
"Yields rose yesterday as energy prices pushed higher, with EUR swaps rising around 8bp higher in the 2Y to 10Y segments of the curve. The US announcement of the size of the buyback announcement was slightly less than market anticipated, and we saw the EUR/USD edge slightly higher in tandem with longer Treasury yields. Today, focus turns to the ECB meeting, where a hike is widely expected."
"In the US, the Treasury announced that today's first expanded long-end bond buyback operation will be up to USD 6bn. This is probably close to the bare minimum needed after the August guidance pointed to more than a doubling of the previous USD 2bn amount, and some investors had seemingly hoped for a larger first step. The announcement applies to today's operation only and does not set the size for later ones. Long-end US Treasury yields rose following the announcement, although the move was contained."
"In the US, August PPI is due for release. In recent months, y/y growth in both headline and core PPI has trended down. Headline PPI inflation is likely to have increased, as oil prices rose again. Unusually, PPI is released before CPI, which is due tomorrow. As a result, PPI could carry more weight than usual for markets."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The EUR/USD pair attracts some dip-buyers during the Asian session on Thursday, though it lacks follow-through as traders seem hesitant ahead of the European Central Bank (ECB) meeting and the US Producer Price Index (PPI). Spot prices currently trade just below mid-1.1600s and remain close to a one-and-a-half-week high, touched on Wednesday.
A 25 basis point (bps) ECB rate hike for the second time this year is considered a done deal, suggesting that the focus will be on the post-meeting press conference. Traders will scrutinize comments from ECB President Christine Lagarde for cues about the future policy path, which, in turn, will drive the Euro and provide some meaningful impetus to the EUR/USD pair.
Traders will further confront the release of the US inflation data, which will be crucial for the Federal Reserve’s (Fed) decision at the September 15–16 meeting. In the meantime, rising Fed rate hike bets, along with further escalation of tensions between the US and Iran, could offer some support to the safe-haven US Dollar (USD) and keep a lid on the EUR/USD pair.
From a technical perspective, spot prices stay above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, at 1.1582, and reclaimed the 23.6% Fibonacci retracement at 1.1625. Moreover, constructive momentum indicators suggest steady but not aggressive upside pressure. The Relative Strength Index hovers just below the overbought threshold around 58.
Adding to this, the Moving Average Convergence Divergence (MACD) line remains marginally above zero with a shallow positive profile. Meanwhile, the next significant resistance is seen near the recent swing high, at 1.1709. A clear break above the said barrier would open the door to a more sustained recovery phase toward higher medium-term levels.
On the downside, immediate support emerges at the 23.6% Fibo. retracement at 1.1625, reinforced by the 200-period EMA and the 38.2% retracement clustered around the 1.1580–1.1570 region. A deeper pullback would expose the 50.0% retracement near 1.1531 and the 61.8% level around 1.1489.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
EUR/USD 4-hour chart
Economic Indicator ECB Press Conference Following the European Central Bank’s (ECB) economic policy decision, the ECB President gives a press conference regarding monetary policy. The president’s comments may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. If the president adopts a hawkish tone it is considered bullish for the EUR, whereas if the tone is dovish the result is usually bearish for the Euro.
EUR/USD struggles to extend its earlier gains on Wednesday as the US Treasury’s bond-buyback announcement sparks a brief bout of volatility, pushing Treasury yields higher and helping the US Dollar (USD) trim its losses.
Traders also avoid placing aggressive bullish bets ahead of the European Central Bank’s (ECB) interest rate decision on Thursday. At the time of writing, EUR/USD trades around 1.1640 as it attempts to secure a break above the 200-day Simple Moving Average (SMA) at 1.1633.
Strategists at Scotiabank note that policy expectations remain firmly supportive ahead of this week’s ECB decision, with “a 25bpt rate hike…fully expected at Thursday’s meeting, and another 25bpts…priced in for December.” They “anticipate a hawkish hike tomorrow, as President Lagarde unveils the latest forecast and signals ongoing concern about upside risk,” helping to underpin the recent recovery in EUR/USD.
Scotiabank describes the tone as “neutral/bullish,” with the latest bounce in the Euro “tentative and negligible, but there nonetheless as spot tests marginal one-week highs in the mid-1.16s.” Momentum indicators are also improving, with the bank highlighting that “the RSI is in the upper 50 area and climbing, leaning toward further near-term gains.”
From a technical perspective, EUR/USD retains a constructive bias, with the pair holding above the 50-day and 100-day SMAs and marginally above the 200-day SMA. Price has formed a sequence of higher highs and higher lows since recovering from below 1.1400 in late July and briefly climbing above 1.1700 on August 21. The latest price action suggests that another higher low may be developing above the 100-day SMA, although buyers still need a decisive break above the 200-day average to strengthen the bullish outlook.
The daily Relative Strength Index (RSI) has steadied above the neutral 50 level and points higher near 58, indicating healthy but not excessive bullish momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) remains slightly below zero, although the fading red histogram suggests that bearish pressure is easing.
On the upside, initial resistance is seen at the 1.1700 horizontal barrier, followed by a stronger hurdle around 1.1800. On the downside, the 200-day SMA near 1.1633 provides immediate support, followed by the 100-day SMA at 1.1561 and the 50-day SMA at 1.1522. A deeper decline could expose the 1.1400 structural support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
U.S. dollar is losing some ground as traders worry that debt markets get out of control.
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+0.03%
USD/JPY Forecast
U.S. Dollar Remains Under Pressure As Bessent Raises Bond Buybacks To $6 Billion
DXY 090926 4h Chart U.S. Dollar Index is losing some ground as traders focus on Treasury’s decision to boost bond buybacks to $6 billion. Bessent continues his attempts to put pressure on yields, but they are rising amid rally in the oil markets. Worries about long-term sustainability of U.S. finances also push yields higher.
The yield of 10-year Treasuries climbed towards the 4.85% level, while the yield of 30-year Treasuries tested the psychologically important 5.30% level.
U.S. Dollar Index continues its attempts to settle below the support level at 98.60 – 98.75. In case U.S. Dollar Index manages to settle below the 98.60 level, it will head towards the next support at 97.70 – 97.85. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in the near term.
EUR/USD Moves Higher Ahead Of Tomorrow’s ECB Decision EUR/USD 090926 4h Chart EUR/USD gained some ground as traders prepared for ECB Interest Rate Decision, which will be released tomorrow. Analysts expect that ECB will raise the interest rate from 2.4% to 2.65% due to rising oil prices.
The European Central Bank is forced to raise rates as the EU economy will face inflationary pressure due to high energy prices. It remains to be seen whether winter will be cold, but energy prices will likely stay high anyway.
If EUR/USD climbs above the 1.1650 level, it will head towards the resistance level at 1.1685 – 1.1700.
GBP/USD Remains Stuck Near Strong Resistance Level GBP/USD 090926 4h Chart GBP/USD remains stuck near the resistance level at 1.3550 – 1.3565. Traders are not ready to buy U.S. dollar amid rising Treasury yields. UK bond yields have also settled near multi-year highs as traders worry about the situation in the UK economy.
If GBP/USD manages to settle above the resistance at 1.3550 – 1.3565, it will move towards the next resistance level, which is located in the 1.3635 – 1.3650 range. On the support side, a move below the 50 MA at 1.3528 will push GBP/USD towards the next support level, which is located in the 1.3470 – 1.3485 range.
USD/CAD Rebounds Above 1.3800
USD/CAD 090926 4h Chart USD/CAD gains ground despite the strong rally in precious metals markets, which was triggered by Treasury’s decision to boost bond buybacks. Gold climbed above the $4400 level, while silver rallied above $67.50. Other commodity-related currencies were mixed in today’s trading session.
The nearest resistance level for USD/CAD is located in the 1.3825 – 1.3840 range. In case USD/CAD manages to settle above 1.3840, it will head towards the next resistance level at 1.3900 – 1.3915.
USD/JPY Tests The 153.00 Level USD/JPY 090926 4h Chart USD/JPY pulls back as traders focus on U.S. bond buybacks. Recent interventions, expectations of a rate hike from BoJ, and problems in U.S. debt market serve as positive catalysts for the Japanese yen.
The nearest support level for USD/JPY is located in the 152.50 – 153.00 range. A successful test of this level will push USD/JPY towards the support at 149.50 – 150.00. RSI has recently moved back into moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
Scotiabank strategists Shaun Osborne and Eric Theoret report EUR/USD is flat in North American trade after touching a one-week high, with fundamentals supported by firmer European Central Bank (ECB) rate expectations on higher Oil prices. Markets fully price a 25 bp hike this Thursday and another in December. They anticipate a hawkish hike and see limited resistance until the 1.1680/1.1700 area, with support below 1.1580.
ECB pricing underpins tentative Euro recovery"The EUR is entering Wednesday’s NA session unchanged vs. the USD following an overnight push to a fresh one week high. Fundamentals remain supportive as ECB rate expectations firm in response to the latest rally in oil prices, reflecting the ECB’s greater sensitivity to energy price risks in the current environment."
"A 25bpt rate hike is fully expected at Thursday’s meeting, and another 25bpts has been priced in for December. We anticipate a hawkish hike tomorrow, as President Lagarde unveils the latest forecast and signals ongoing concern about upside risk."
"In terms of data, releases have been limited to second-tier French industrial production data delivering an unexpected contraction in July. There are no major top-tier releases scheduled ahead of next week’s ZEW sentiment figures."
"Neutral/bullish – the latest recovery in the EUR is tentative and negligible, but there nonetheless as spot tests marginal one week highs in the mid-1.16s. The RSI is in the upper 50 area and climbing, leaning toward further near term gains."
"The 200 day MA (1.1634) looks to have provided modest closing resistance over the past week or so, however we note the absence of any meaningful resistance ahead of the 1.1680/1.1700 area. Near-term support is expected below 1.1580."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The Euro (EUR) gives back its early gains and flattens at around 1.1625 against the US Dollar (USD) during the European trading session on Wednesday. The major currency pair falls back as the US Dollar recovers its early losses.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades flat around 98.82.
Financial markets expect the outlook of the US Dollar banks upon the United States (US) Consumer Price Index (CPI) data for August, which will be released on Friday.
US inflation seen contained even as headline picks up on energyAccording to TD Securities, the upcoming August CPI report should show that underlying price pressures remain contained, with the bank expecting that "underlying inflation stayed under control, with core likely rising 0.19% m/m (2.3% y/y)." Strategists there highlight that "the services segment should be the main driver, while core goods prices likely acted as a drag by posting a modest m/m drop." In contrast, they anticipate that "headline CPI will likely be a stronger 0.37% m/m (3.4% y/y) due to rising energy prices and a slight pickup in food inflation."
The inflation data is expected to have a significant impact on the Federal Reserve’s (Fed) monetary policy outlook.
Currently, the CME FedWatch tool shows a 60% chance that the Fed will raise interest rates in the September policy meeting.
Meanwhile, the Euro is expected to trade broadly sideways ahead of the European Central Bank (ECB) monetary policy announcement on Thursday. According to market expectations, the ECB will hike policy rates by 25 basis points (bps), which underscores commentary on interest rate expectations as a key trigger for the Euro’s next move.
Strategists at Scotiabank said in a note that “focus this week centres on Thursday’s ECB, where policymakers are widely expected to deliver a 25bps hike while maintaining a relatively hawkish tone as they seek to lean against the risk of energy-led inflation and mitigate any potential for broadening inflationary pressures.”
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1626. The pair holds a modest bullish bias as spot remains above the 20-day Exponential Moving Average (EMA) at 1.1605.
The Relative Strength Index (RSI) at roughly 57 stays in neutral-positive territory, hinting that upside momentum is present but not overstretched after the recent push higher.
On the downside, immediate support is located at the 20-day EMA around 1.1605, where a daily close below would weaken the constructive tone and expose a deeper correction toward prior lows; below that, the psychological level of 1.1500 is the key support level. On the upside, the 1.1686-1.1710 range is the critical supply zone for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator ECB Main Refinancing Operations Rate One of the three key interest rates set by the European Central Bank (ECB), the main refinancing operations rate is the interest rate the ECB charges to banks for one-week long loans. It is announced by the European Central Bank at its eight scheduled annual meetings. If the ECB expects inflation to rise, it will increase its interest rates to bring it back down to its 2% target. This tends to be bullish for the Euro (EUR), since it attracts more foreign capital inflows. Likewise, if the ECB sees inflation falling it may cut the main refinancing operations rate to encourage banks to borrow and lend more, in the hope of driving economic growth. This tends to weaken the Euro as it reduces its attractiveness as a place for investors to park capital.
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ING’s Chris Turner describes EUR/USD near 1.1600 as mid-range since April, noting Euro terms-of-trade deterioration should weigh more on the pair. ING expects a dovish ECB hike that fails to validate additional tightening priced by markets. With a quiet Eurozone calendar, they see limited justification for a break above 1.1640/45 and prefer a 1.15 end-September target after a Fed hike.
Euro holds but upside seen limited"Near 1.1600, EUR/USD is sitting approximately in the middle of its range seen since April. As above, we would have thought that the clear decline in the euro's terms of trade would be an important factor weighing on EUR/USD this week. The fact that it is holding up quite well probably raises more questions for the dollar."
"Unlike the market, we are looking for a dovish hike – or at least a hike which does not support the additional 50bp of tightening priced in after Thursday's expected 25bp move."
"The eurozone calendar is very quiet today. We do not quite see a justification for EUR/USD to break above resistance at 1.1640/45, but if so, 1.1675/80 beckons. At present, we prefer a 1.15 end-September target on the back of a Fed hike."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The EUR/USD pair attracts fresh buyers during the Asian session on Wednesday, though it lacks bullish conviction and remains confined within the weekly range. Spot prices currently trade near the 1.1630 region, up around 0.05% for the day, as bulls opt to wait for the European Central Bank (ECB) meeting and crucial US inflation figures.
A 25 basis point (bps) rate hike by the ECB on Thursday is considered a done deal, suggesting that the focus will be on the central bank's outlook amid elevated inflation risks. Traders will then confront the release of the US Producer Price Index (PPI) and the Consumer Price Index (CPI) on Thursday and Friday, respectively, which might offer cues about the Federal Reserve's (Fed) policy path. In the meantime, September Fed rate hike bets remain in play, which, along with geopolitical uncertainties, could support the US Dollar (USD) and cap gains for the EUR/USD pair.
From a technical perspective, spot prices hold a constructive short-term bias above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, at 1.1579, and the 38.2% Fibonacci retracement of the 1.1323–1.2072 upswing at 1.1609. Moreover, the Relative Strength Index (RSI) near 58 and a slightly positive Moving Average Convergence Divergence (MACD) reading hint that bullish momentum persists, though not in overstretched territory.
Meanwhile, initial resistance is aligned at the 50.0% retracement at 1.1698, followed by the 61.8% level at 1.1786, with higher barriers at 1.1912 and the 1.2072 swing high. On the downside, immediate support is seen at the 38.2% retracement at 1.1609, ahead of the 200-period EMA at 1.1579. A convincing break below these would expose the 23.6% retracement at 1.1500 and the 1.1323 cycle low.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
EUR/USD 4-hour chart
ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
The Euro (EUR) attempts to resume its uptrend against the US Dollar (USD) on Wednesday’s early European session despite the risk-off mood and the high Crude prices. EUR/USD is drawing support from USD weakness to hit 12-day highs just above 1.1640, as investors brace for Thursday’s European Central Bank (ECB) monetary policy meeting.
Euro rallies are likely to remain shallow, with Oil prices at their highest levels in the last three months as the situation in the Gulf deteriorates by the day. Tehran launched an attack on a US Navy warship and an airbase in Jordan on Tuesday, and the US military responded by targeting several Iranian tankers. Beyond that, Iran-backed Houthi militias attacked Oil facilities in Saudi Arabia, which risks leading the conflict into an all-out regional war.
Dollar debasement debate weighs on sentimentThe US Dollar, on the other hand, remains on its back foot despite the strong US Nonfarm Payrolls data released last week, with investors awaiting Friday's Consumer Price Index (CPI) report to consolidate hopes of a Federal Reserve (Fed) rate hike at next week's meeting.
Analysts at Rabobank highlight that the “USD’s dithery tone in recent session adds weight to the view that there has been a change in sentiment in the FX market.” They argue that the “Dollar debasement debate which was triggered by US Treasury Secretary Bessent’s bond intervention announcement on August 19 appears to have undermined confidence in the greenback,” helping to explain why the currency has struggled to capitalise on otherwise supportive rate expectations.
The calendar is thin on Wednesday, with ECB President Christine Lagarde's speech at the Deutsche Bundesbank in Berlin, the only event worth mentioning. Lagarde, however, will not speak about monetary policy as the central bank kicks off its two-day meeting, which is widely expected to end with a quarter-point hike to 2.5% in the central bank's benchmark interest rate.
ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
FX analysts see improving yield support for the Euro ahead of Thursday’s ECB decision, with resistance at 1.1680-1.1700. The Euro to Dollar (EUR/USD) exchange rate recovered from earlier losses to trade near 1.1626 on Tuesday afternoon, holding Monday’s gains as expectations of an ECB rate increase supported the single currency.
EUR/USD was virtually unchanged on the day at the time of writing, having risen 0.12% on Monday.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.162453 (-0.03%)
Pound to Dollar (GBP/USD): 1.355083 (+0.03%)
Dollar to Yen (USD/JPY): 154.0889 (+0.17%)
Scotiabank maintains a neutral-to-bullish short-term outlook, with improving interest-rate differentials supporting its assessment.
“The outlook for relative central bank policy remains supportive as we note the continued recovery in yield spreads with a narrow (2Y Germany-US yield spread only) fair value estimate currently around 1.1650.”
That estimate sits modestly above the latest exchange rate, although it measures only the relationship with two-year German and US yields rather than providing a broader price target.
ECB Guidance Could Determine the Next Euro Move Scotiabank expects a widely anticipated 25-basis-point hike at Thursday’s ECB monetary policy meeting, alongside a relatively hawkish message on energy-driven inflation risks.
With an increase already priced in, the scope for further Euro gains may depend more on guidance about subsequent decisions, as we explored in our latest coverage of ECB expectations.
Options pricing has also become less defensive.
“Risk reversals are actually up on the day, suggesting a fading premium for protection against EUR weakness,” Scotiabank said.
The bank reported little currency reaction to Sunday’s German state election result, while stronger German trade figures were offset by a disappointing French deficit.
Image: EUR/USD last 48hr chart Scotiabank describes the medium-term trend as bullish following the recovery from late June, although its longer-term assessment remains range-bound and the RSI is only marginally above neutral.
“We see near-term support around last week’s lows near 1.1580 and see limited resistance ahead of the 1.1680/1.1700 range.”
Those resistance levels precede the higher 1.18-1.20 area in UBS’s Euro-Dollar outlook.
Thursday’s decision and accompanying guidance will test whether improving yield support is enough to carry the EUR/USD exchange rate towards 1.1700.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Key Points:EUR/USD is swinging between gains and losses as traders react to Germany's Exports data. USD/CAD made an attempt to settle below the support at 1.3750 - 1.3765.USD/JPY rebounded from session lows as traders focused on rising Treasury yields.
EUR/USD
-0.02%
EUR/USD ForecastGBP/USD
-0.07%
GBP/USD ForecastUSD/CAD
-0.13%
USD/CAD ForecastUSD/JPY
+0.28%
USD/JPY Forecast
U.S. Dollar Attempts To Rebound After Recent Pullback
DXY 080926 4h Chart U.S. Dollar Index moved away from session lows as traders focused on rising Treasury yields. The yield of 2-year Treasuries climbed towards the 4.40% level, while the yield of 10-year Treasuries settled near 4.80%.
I’d note that Bessent’s buyback efforts have so far failed to push yields of longer-dated bonds lower. The yield of 30-year Treasuries settled near 5.25%, close to the critical 5.30% level.
In case U.S. Dollar Index climbs above the 99.00 level, it will head towards the nearest resistance level, which is located in the 99.25 – 99.40 range.
EUR/USD Stays Above The 1.1600 Level EUR/USD 080926 4h Chart EUR/USD is mostly flat as traders focus on Germany’s Exports report. The report showed that Exports decreased by -0.8% month-over-month in July, compared to analyst forecast of 0%.
I believe that traders are already cautious ahead of the ECB Interest Rate Decision, which will be released on Thursday.
The nearest support level for EUR/USD is located in the 1.1600 – 1.1615 range. If EUR/USD manages to settle below the 1.1600 level, it will head towards the next support level at 1.1500 – 1.1515. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
GBP/USD Attempts To Settle Above 1.3565 GBP/USD 080926 4h Chart GBP/USD continues its attempts to settle above the resistance level at 1.3550 – 1.3565 as traders focus on the BRC Retail Sales Monitor report from the UK. The report showed that Retail Sales increased by +0.5% year-over-year in August, compared to analyst forecast of +1.2%.
If GBP/USD manages to settle above the 1.3565 level, it will head towards the next resistance, which is located in the 1.3635 – 1.3650 range. On the support side, a move below the 50 MA at 1.3533 will push GBP/USD towards the next support at 1.3470 – 1.3485.
USD/CAD Rebounds From Session Lows
USD/CAD 080926 4h Chart USD/CAD moved lower as traders focused on U.S. – Canada trade war. Canada’s Prime Minister Mark Carney said that counter-tarrifs against the U.S. were necessary to protect Canadian businesses. Interestingly, the market does not believe that the trade war is a negative catalyst for the Canadian currency.
From the technical point of view, USD/CAD made an attempt to settle below the support level at 1.3750 – 1.3765 but lost momentum and rebounded towards the 1.3790 level. In case USD/CAD settles back above 1.3800, it will head towards the nearest resistance at 1.3825 – 1.3840. A successful test of this level will push USD/CAD towards the next resistance at 1.3900 – 1.3915.
USD/JPY Climbed Back Above 154.00 Amid Rising Treasury Yields USD/JPY 080926 4h Chart USD/JPY attempts to rebound after the strong sell-off as traders react to rising Treasury yields and focus on Japan’s second-quarter GDP Growth Rate report. The report showed that Japan’s GDP Growth Rate was +0.4%, in line with analyst estimates.
Traders try to guess whether BoJ is ready to intervene again at current levels or the Bank has finished its interventions. The expectations of a rate hike from the BoJ served as an additional bullish catalyst for the yen in recent trading sessions, but Fed may also raise rates at the meeting on September 16.
In case USD/JPY stays above the 154.00 level, it will head towards the resistance level at 155.00 – 155.50. A move above the 155.50 level will open the way to the test of the resistance level at 157.50 – 158.00.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
EUR/USD trades virtually flat near 1.1623 during American trading hours on Tuesday. The US Dollar (USD) struggles to hold its earlier gains, helping the Euro (EUR) recover from its intraday low.
The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 98.82 after briefly reclaiming 99, hovering near its lowest level in more than two weeks.
The Greenback struggles to gain traction despite hawkish Federal Reserve (Fed) expectations. Escalating tensions in the Middle East do little to revive defensive demand for the currency, which is largely weighed down by the sharp rise in the Japanese Yen (JPY).
Fresh hostilities in the Middle East keep Oil prices elevated, adding to inflation concerns and strengthening the case for tighter monetary policy. The US Producer Price Index (PPI) on Thursday and Consumer Price Index (CPI) on Friday will be the next major test for the Fed ahead of its policy decision.
According to the CME FedWatch Tool, markets see around a 60% chance that the Fed will raise interest rates by 25 basis points at its September 15-16 meeting.
On the Euro side, attention is firmly on the European Central Bank’s (ECB) interest-rate decision on Thursday. The ECB is widely expected to raise its deposit rate by 25 basis points to 2.50%, with markets fully pricing in the move. This would be its second rate increase this year after the June hike.
Eurozone inflation accelerated to 3.3% in August from 2.9% in July, largely due to higher energy prices. As the rate hike is already priced in, the Euro’s reaction could depend more on President Christine Lagarde’s comments and the ECB’s updated economic projections. Traders will look for signs of whether policymakers are considering another increase after September or plan to pause.
Analysts at ING highlight that the latest data revisions have reinforced the Eurozone’s growth narrative, with second-quarter output "revised up from 0.4% to 0.6% QoQ, driven by stronger Irish growth on the back of robust multinational performance." They note that, more broadly, "Europe’s resilience despite geopolitical developments and higher commodity prices remains a key theme of the summer and has likely helped keep the euro relatively expensive."
Even so, ING maintains a cautious stance on the currency pair, stressing that "our short-term downside preference in EUR/USD is still mainly driven by our USD view and expectation of a September Fed hike." The bank adds that "the latest rise in energy prices adds further support" to this bias, reinforcing their view that the Euro’s current strength may prove difficult to sustain in the near term.
ECB FAQs The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
EUR/USD 15 minute chart August 31 2026 (Sell entry)
EURUSD moves lower and on September 1 2026 price hits the 3R target at 1.1576 from 1.1612 and I closed the sell trade for +36 pips (+3% gain risking 1% on every trade)
EUR/USD 15 minute chart September 1 2026 (Targets hit/trade closed)
A trader should always have multiple strategies all lined up before entering a trade. Never trade off one simple strategy. When multiple strategies all line up it allows a trader to see a clearer trade setup. We at EWF never say we are always right. No market service provider can forecast markets with 100% accuracy. Only thing we at EWF 100%, is that we are RIGHT more than we are WRONG.
ING’s Francesco Pesole notes that stronger second-quarter Eurozone growth and resilience to geopolitical and commodity shocks have kept the Euro (EUR) relatively expensive. However, he maintains a short-term downside bias in EUR/USD driven by expectations of a September Fed hike and worsening Eurozone terms of trade, seeing a move towards 1.150 over coming weeks as a realistic scenario ahead of a potentially dovish European Central Bank (ECB) meeting.
Euro resilience but softer path seen"Second-quarter eurozone growth was revised up from 0.4% to 0.6% QoQ, driven by stronger Irish growth on the back of robust multinational performance."
"More broadly, Europe’s resilience despite geopolitical developments and higher commodity prices remains a key theme of the summer and has likely helped keep the euro relatively expensive."
"Our short-term downside preference in EUR/USD is still mainly driven by our USD view and expectation of a September Fed hike. That said, the latest rise in energy prices adds further support."
"Real-time estimates suggest the eurozone’s commodity terms of trade are now worse than at the previous low in March."
"Ahead of Thursday’s ECB meeting, we see some dovish risks given the market’s aggressive tightening expectations. In that context, a move towards 1.150 over the coming weeks remains realistic in our view."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
The Euro (EUR) is down 0.1% at around 1.1610 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair trades lower as the US Dollar turns positive after a weak start.
At press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.1% higher at around 99.00.
Financial markets expect the US Dollar to remain rangebound as a slight improvement in Federal Reserve’s (Fed) interest rate hike expectations, following strong United States (US) Nonfarm Payrolls (NFP) data for August, has limited its downside, while positive commentary from Fed members on inflation has restricted the upside.
Going forward, the release of the US Consumer Price Index (CPI) data for August on Friday is expected to bring a decisive move in the US Dollar.
Meanwhile, the Euro is also expected to remain in a limited range as investors await the European Central Bank’s (ECB) interest rate decision on Thursday.
According to ABN Amro, “the path for the ECB is clear, and a rate hike at Thursday’s Governing Council meeting is fully priced by financial markets”.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1612, holding a neutral near-term bias as it remains close to the 20-period exponential moving average (EMA) at 1.1601. This close alignment between price and the short-term EMA suggests the pair is consolidating its recent gains rather than reversing, while the Relative Strength Index (RSI) at 54 keeps momentum in neutral-to-positive territory, hinting that buyers still retain a slight edge.
On the downside, initial support is seen at the 20-period EMA near 1.1600, where dip-buying interest could emerge if the pair pulls back. The major currency pair could slide to the psychological level of 1.1500 if it fails to hold the 20-day EMA. Looking up, the August high at 1.1710 is the key hurdle for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator ECB Main Refinancing Operations Rate One of the three key interest rates set by the European Central Bank (ECB), the main refinancing operations rate is the interest rate the ECB charges to banks for one-week long loans. It is announced by the European Central Bank at its eight scheduled annual meetings. If the ECB expects inflation to rise, it will increase its interest rates to bring it back down to its 2% target. This tends to be bullish for the Euro (EUR), since it attracts more foreign capital inflows. Likewise, if the ECB sees inflation falling it may cut the main refinancing operations rate to encourage banks to borrow and lend more, in the hope of driving economic growth. This tends to weaken the Euro as it reduces its attractiveness as a place for investors to park capital.
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Inflation concerns dominate the euro this week with the European Central Bank’s (ECB) meeting. All 65 economists in the Reuters poll expect the ECB to increase their deposit rate by 25 basis points to 2.50 percent. Inflation for the Eurozone jumped to 3.3 percent. High energy prices from the Iran conflict drive the inflation.
The discussion is turning to the possibility that September will only be the first in multiple hiking cycles. Deutsche Bank has already adjusted their forecast to include anticipating another hike in December.
Like many central banks, the Bank of England faces challenges with the energy crisis. Inflation risks returning mixed with weaker economies and already tighter financial conditions. Therefore, the Bank of England is likely to look at the energy crisis and global bonds and their corresponding yields to hopefully gain some insights into what their next moves should be. This means that sterling is going to be very volatile to the next set of Bank of England policy updates and how global markets react to those policies. Meanwhile, the greenback side of the GBP/USD will be under the control of the updates to U.S. inflation which will be available this week.
Fundamental bias: DXY neutral-to-bullish, EUR moderately bullish, GBP neutral-to-bullish.
U.S. Dollar Index Technical Analysis: DXY Remains Bearish Below 99.20 as 98.71 Support Comes Into View
The EUR/USD enters a potentially decisive week with monetary policy on both sides of the Atlantic once again driving the currency pair. The European Central Bank is widely expected to raise interest rates on September 10, while the release of U.S. inflation data on September 11 could determine whether the Federal Reserve follows with a rate hike of its own next week.
The ECB decision is largely anticipated, meaning the market reaction could depend less on the 25-basis-point move itself and more on the central bank’s guidance about what comes next. In the United States, meanwhile, the August consumer-price index could change expectations for the September 15-16 Federal Reserve meeting. That creates scope for increased volatility in the EUR/USD pair, particularly because the FX pair seems to be consolidating after a rebound.
Daily EURUSD Chart - Source: ActivTraderECB and Fed policy divergence could drive EUR/USD volatilityEurozone inflation accelerated to 3.3% in August from 2.9% in July, according to Eurostat’s preliminary estimate, marking its highest level since September 2023. The increase was largely driven by energy prices, with energy inflation accelerating to 14.3% from 10.3%. Core inflation, however, eased slightly to 2.4% from 2.5%.
This release has strengthened expectations that the ECB will continue tightening monetary policy despite the risk that higher energy costs could weigh on economic activity. All 65 economists surveyed by Reuters expected the ECB to raise its deposit rate by 25 basis points to 2.50% on September 10.
The hike itself, therefore, should not come as a major surprise to markets. Instead, traders are likely to concentrate on ECB President Christine Lagarde’s communication and the updated economic projections. The key question is whether the ECB considers September’s increase the end of the tightening cycle or whether it leaves the door open to additional hikes. This distinction could prove important for the EUR/USD’s trajectory.
Reuters’ latest economist poll found that 91% of respondents expect the deposit rate to finish 2026 at 2.50%, while 78% expect it to remain there through the middle of 2027. Interest-rate markets, however, have been more hawkish and have been pricing the possibility of another increase.
The energy shock makes the ECB’s communication particularly important. Continued geopolitical tensions and elevated oil and gas prices could keep headline inflation above target for longer, potentially forcing policymakers to maintain a restrictive stance. Economists surveyed by Reuters now expect eurozone inflation to return to the ECB’s 2% target only toward the end of 2027.
For the euro, a clearly hawkish ECB could therefore provide support, particularly if policymakers signal that another rate increase remains possible.
The other side of the EUR/USD equation is the Federal Reserve.
The U.S. August employment report has already complicated the picture. Nonfarm payrolls increased by 162,000 in August, significantly exceeding expectations, while the unemployment rate remained at 4.1%. Additionally, the change for July was revised up, from -23,000 to +21,000. The stronger labour-market figures pushed market expectations for a September Fed hike higher. Reuters reported that fed funds futures were pricing a roughly 57% probability of an increase late on Friday.
That leaves the August CPI report as a potentially decisive catalyst. The U.S. Bureau of Labor Statistics is scheduled to publish the figures on Friday, September 11. July CPI showed annual inflation at 3.4%, while core inflation stood at 2.5%. Economists surveyed by Reuters expect August CPI to rise 0.4% month-on-month, with core CPI increasing 0.2%.
A hotter-than-expected inflation reading could reinforce expectations for a September Fed hike and potentially strengthen the dollar. Conversely, evidence that underlying inflation is continuing to moderate could reduce the probability of immediate tightening, weighing on the dollar and potentially supporting the EUR/USD.
The CPI report arrives only days before the Fed’s September 15-16 meeting, leaving little room for markets to ignore the data. Fed Governor Christopher Waller has already indicated that he would favour keeping rates unchanged if the upcoming inflation figures confirm that price pressures are cooling.
EUR/USD daily technical outlookThe pair has recovered significantly from its summer lows, rebounding by roughly 3.13% from around 1.1355. This recovery allowed the EUR/USD to break above the Ichimoku cloud on the daily chart. However, the rebound has lost momentum around the 1.1674 area. The EUR/USD is currently trading near 1.1611 and appears to have entered a consolidation phase, with the pair broadly confined between resistance around 1.1674 and support near 1.1559.
Daily EUR/USD Chart - Source: ActivTraderThis range could become particularly important as the ECB and U.S. CPI approach. A sustained break above 1.1674 would represent a significant technical development. It would indicate that buyers have regained control after the recent consolidation and could open the way toward higher levels.
A break below 1.1559, by contrast, would weaken the current bullish structure and suggest that the recent recovery is losing momentum. Such a move could expose the pair to further downside as traders reassess the sustainability of the summer rebound.
Momentum indicators provide a relatively neutral signal at present. The 14-period Relative Strength Index is around 53.94, keeping it slightly above the key 50 threshold but without real moment or heading towards overbought territory. The RSI has also struggled to extend higher after approaching an ascending support trendline that has developed from the oversold low reached at the end of June. This suggests that neither buyers nor sellers currently have a decisive advantage.
The Ichimoku configuration nevertheless remains worth monitoring. The earlier move above the daily cloud improved the medium-term technical picture, but the failure to establish a sustained move above 1.1674 means confirmation is still lacking. For traders, the coming economic events could therefore provide the catalyst needed to break the current range.
Source: MorningStarA hawkish ECB combined with softer-than-expected U.S. inflation would represent the clearest bullish combination for the EUR/USD. Such a scenario could increase expectations for further ECB tightening while simultaneously reducing the probability of a near-term Fed hike, narrowing the expected interest-rate differential between the euro and dollar.
The opposite combination would be potentially bearish for the pair. A hawkish ECB that is fully priced in, followed by stronger-than-expected U.S. inflation, could revive expectations for Fed tightening and strengthen the dollar. In that scenario, the 1.1559 support level could come under significant pressure.
There is also a third possibility: both central banks could deliver hawkish signals. If the ECB raises rates but signals that September could be its final move, while U.S. inflation remains elevated, the dollar could regain an advantage despite the ECB’s tightening.
The ECB decision may establish the initial direction, but U.S. inflation could ultimately determine whether the pair breaks out of its current range. With EUR/USD trading close to the middle of the 1.1559-1.1674 range, the market seems to be waiting for a catalyst. The key levels to watch: 1.1674 on the upside and 1.1559 on the downside. A decisive break of either boundary could provide a stronger signal about the next directional move.
Until then, traders should expect potentially intraday swings around the ECB decision, U.S. PPI and Friday’s CPI release. With monetary-policy expectations finely balanced on both sides of the Atlantic, the EUR/USD could be particularly sensitive to even relatively small surprises in the data.
EUR/USD trades near 1.1627 on Tuesday after a US jobs report that came in almost three times above forecast. The data supported the dollar and strengthened expectations of tighter Federal Reserve policy. Attention now shifts to the European Central Bank meeting on 10 September, where the rate increase is already fully priced in, and the guidance that follows will determine the euro’s next move.
US Jobs Data Put the Dollar Back on the Front Foot The US labour market delivered its strongest month since March. Nonfarm payrolls rose by 162,000 in August against a market forecast of around 56,000. The unemployment rate held at 4.1%, average hourly earnings rose 3.1% year-on-year, and the Bureau of Labor Statistics revised June and July higher by a combined 55,000, turning July’s previously reported job loss into a gain.
Nonfarm payrolls measure how many paid jobs the US economy added during the month, excluding farm work. They provide one of the clearest monthly indications of how much room the Fed has to adjust interest rates.
A labour market this resilient takes the pressure off the Fed to support growth and leaves inflation as its main concern. After the release, money markets raised the probability of a September rate increase to around 58%, up from roughly 52% before the data. Higher expected US rates make dollar deposits more attractive, so the dollar gained ground and EUR/USD settled into a narrow range.
Why the ECB Meeting Matters More Than the Decision Itself All 65 economists polled by Reuters expect a 25-basis-point increase in the deposit rate to 2.50%. A basis point is one hundredth of a percentage point, so 25 basis points equal 0.25%. Money markets are pricing in the same outcome with near-full certainty and expect the deposit rate to rise further, reaching around 3.00% by June 2027. That implies two more increases after this week.
When an outcome is fully priced in, the decision itself rarely moves the market. The euro will take its cue from the press conference. Eurozone inflation accelerated to 3.3% in August, driven largely by energy costs, and Christine Lagarde has already identified the energy shock as an upside risk to prices.
That leaves one open question for Thursday. If Lagarde confirms that further tightening remains under discussion, the euro could gain support against a dollar that is also pricing in higher rates, with EUR/USD potentially testing 1.1655, the upper edge of its current range. If she delivers the rate increase and keeps every option open without committing to a path, the rate outlook remains in the dollar’s favour, and the pair could move towards 1.1525.
German Factory Orders Add a Second Layer New orders in German manufacturing rose 2.5% in July after an upwardly revised 3.7% increase in June. The market expected 0.3%, and this was the third consecutive monthly increase.
The detail matters for anyone trading the euro. Excluding large-scale contracts, orders fell 1.4% from June. Domestic orders jumped 9.1% while foreign orders fell 2.1%, with demand from outside the euro area down 10.1% and demand from inside the bloc up 12.1%. Most of the headline strength came from shipbuilding, rail and aircraft contracts.
German industry is recovering, but that recovery currently relies on a small number of large contracts and on demand from within Europe. For the ECB, this supports the case that the economy can absorb higher rates.
EUR/USD Technical Analysis
On the four-hour chart, EUR/USD is building a consolidation range around 1.1620. An upward move towards 1.1655 remains on the table, with a decline towards 1.1525 seen as the following stage.
The MACD indicator supports this reading. MACD compares two moving averages of price and shows whether momentum is building or fading. Its signal line sits above zero and points firmly upwards, reflecting bullish momentum with room for the move higher to continue in the near term.
On the hourly chart, the market has completed a downward wave to 1.1620. The pair is now consolidating above that level. The working scenario for today is another upward leg towards 1.1655.
The Stochastic oscillator supports this view. The Stochastic oscillator shows where the current price sits within its recent trading range. Its signal line is above 20 and points upwards towards 80, indicating that the move higher still has room to develop.
Conclusion EUR/USD enters the ECB week with the technical picture pointing towards 1.1655 in the near term, while the fundamental picture stays split between two central banks moving in the same direction. The rate increase to 2.50% is already priced in, so the euro’s next move depends on the guidance that follows.
While the pair holds above 1.1620, the upside scenario remains the working one, with 1.1525 the level to watch further out should the move higher fail to hold. The US inflation report due next week will be the next catalyst on the dollar side of the pair, so the levels set this week are likely to be tested again quickly. Traders who want to follow the reaction in real time can place both levels on the chart in advance and watch how EUR/USD behaves around them during the decision.
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EUR/USD trades near 1.1627 on Tuesday after a US jobs report that came in almost three times above forecast. The data supported the dollar and strengthened expectations of tighter Federal Reserve policy. Attention now shifts to the European Central Bank meeting on 10 September, where the rate increase is already fully priced in, and the guidance that follows will determine the euro's next move.
US jobs data put the Dollar back on the front footThe US labour market delivered its strongest month since March. Nonfarm payrolls rose by 162,000 in August against a market forecast of around 56,000. The unemployment rate held at 4.1%, average hourly earnings rose 3.1% year-on-year, and the Bureau of Labor Statistics revised June and July higher by a combined 55,000, turning July's previously reported job loss into a gain.
Nonfarm payrolls measure how many paid jobs the US economy added during the month, excluding farm work. They provide one of the clearest monthly indications of how much room the Fed has to adjust interest rates.
A labour market this resilient takes the pressure off the Fed to support growth and leaves inflation as its main concern. After the release, money markets raised the probability of a September rate increase to around 58%, up from roughly 52% before the data. Higher expected US rates make dollar deposits more attractive, so the dollar gained ground and EUR/USD settled into a narrow range.
Why the ECB meeting matters more than the decision itselfAll 65 economists polled by Reuters expect a 25-basis-point increase in the deposit rate to 2.50%. A basis point is one hundredth of a percentage point, so 25 basis points equal 0.25%. Money markets are pricing in the same outcome with near-full certainty and expect the deposit rate to rise further, reaching around 3.00% by June 2027. That implies two more increases after this week.
When an outcome is fully priced in, the decision itself rarely moves the market. The euro will take its cue from the press conference. Eurozone inflation accelerated to 3.3% in August, driven largely by energy costs, and Christine Lagarde has already identified the energy shock as an upside risk to prices.
That leaves one open question for Thursday. If Lagarde confirms that further tightening remains under discussion, the euro could gain support against a dollar that is also pricing in higher rates, with EUR/USD potentially testing 1.1655, the upper edge of its current range. If she delivers the rate increase and keeps every option open without committing to a path, the rate outlook remains in the dollar's favour, and the pair could move towards 1.1525.
German factory orders add a second layerNew orders in German manufacturing rose 2.5% in July after an upwardly revised 3.7% increase in June. The market expected 0.3%, and this was the third consecutive monthly increase.
The detail matters for anyone trading the euro. Excluding large-scale contracts, orders fell 1.4% from June. Domestic orders jumped 9.1% while foreign orders fell 2.1%, with demand from outside the euro area down 10.1% and demand from inside the bloc up 12.1%. Most of the headline strength came from shipbuilding, rail and aircraft contracts.
German industry is recovering, but that recovery currently relies on a small number of large contracts and on demand from within Europe. For the ECB, this supports the case that the economy can absorb higher rates.
EUR/USD technical analysis
On the four-hour chart, EUR/USD is building a consolidation range around 1.1620. An upward move towards 1.1655 remains on the table, with a decline towards 1.1525 seen as the following stage.
The MACD indicator supports this reading. MACD compares two moving averages of price and shows whether momentum is building or fading. Its signal line sits above zero and points firmly upwards, reflecting bullish momentum with room for the move higher to continue in the near term.
On the hourly chart, the market has completed a downward wave to 1.1620. The pair is now consolidating above that level. The working scenario for today is another upward leg towards 1.1655.
The Stochastic oscillator supports this view. The Stochastic oscillator shows where the current price sits within its recent trading range. Its signal line is above 20 and points upwards towards 80, indicating that the move higher still has room to develop.
ConclusionEUR/USD enters the ECB week with the technical picture pointing towards 1.1655 in the near term, while the fundamental picture stays split between two central banks moving in the same direction. The rate increase to 2.50% is already priced in, so the euro's next move depends on the guidance that follows.
While the pair holds above 1.1620, the upside scenario remains the working one, with 1.1525 the level to watch further out should the move higher fail to hold. The US inflation report due next week will be the next catalyst on the dollar side of the pair, so the levels set this week are likely to be tested again quickly. Traders who want to follow the reaction in real time can place both levels on the chart in advance and watch how EUR/USD behaves around them during the decision.
The Dollar index has declined below 99 and looks bearish for the near term with the Euro likely to head towards 1.17. USDJPY and EURJPY have plunged yet again and looks strongly bearish towards 150-148 and 175/170. EURINR could have limited upside to 110-110.50. Aussie and Pound lookk bullish. USDCNY has dipped as expected and can test 6.70. USDINR can continue to trade within 94.80-94.25 range for a while with some possibility of testing 94.
The US Treasury Yields remain stable in the early Asian session. The US markets were closed yesterday. The outlook remains bullish. The Treasury Yields can rise more from here. The German Yields have risen well. A follow-through rise from here can take them further higher in the coming days. View is bullish. The 10Yr GoI remains stable. As mentioned yesterday, a narrow range is possible for some time before we get more rise eventually.
Dow remains range-bound between 52500-54000, while DAX can rise towards 26500. Nifty has slipped below 23800, keeping the downside risk open towards 23600-23500. Nikkei remains positive and can rise towards 67000-68000. Shanghai is likely to continue trading within the 3850-4000 range while below 4000.
Brent and WTI continue to move higher in line with our expectations and can rise towards $100 and $95 respectively. Gold remains positive above $4300 and can rise towards $4600. Silver needs a sustained break above $70 for a move towards $75-$80. Copper is testing the key $6.80 resistance, with a break above it opening the way towards $6.90-$7.00, while a failure could lead to a dip towards $6.70-$6.60. Natural Gas needs to sustain above $3.00 for a rise towards $3.25-$3.50.
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EUR/USD 070926 4h Chart EUR/USD gained some ground despite the disappointing Industrial Production report from Germany. The report showed that Industrial Production decreased by -1.1% month-over-month in July, compared to analyst forecast of +0.1%.
Traders also focused on the results of elections in Germany’s Saxony-Anhalt, which ended in a massive win for the anti-immigration Alternative for Germany. The AfD party reached its best result ever, raising worries about its potential success at a federal level.
AfD’s victory in Saxony-Anhalt is a big deal for Germany’s political scene, but I do not think that it will have a material impact on the dynamics of the European currency in the near term. That said, political shifts in Europe are always worth watching.
In case EUR/USD stays above the 1.1615 level, it will head towards the next resistance level, which is located in the 1.1685 – 1.1700 range.
The EUR/USD is our currency pair of the week, due mainly to the fact we have the ECB’s policy decision being sandwiched between two important US inflation data releases. But with a light calendar in the early parts of the week, traders will get their cues from oil prices, which continue to push higher amid growing escalation between the US and Iran. The higher oil goes, the worse it may get for the euro, which, to be fair, has performed well during the more recent rises in oil prices compared to earlier this year. Still, the risks to the near EUR/USD forecast remains tilted lower as the pair tests the 200-day average ahead of a pivotal week.
Energy’s impact on EUR/USD forecast lower than expected In recent months, economic data has become increasingly more important for the FX volatility than energy prices. This is because unlike earlier in the year, the starting point for any renewed gains in oil prices has been much higher than the pre-conflict levels. At the start of the year, oil prices skyrocketed both in nominal terms and percentage terms as they climbed from a low base. Recent gains have been far less eye-catching in percentage terms and therefore marginally less inflationary (remember inflation describes the rate of change of prices). Well, that is until now. If we see oil prices break above $100 per barrel, then surely the euro will react negatively, and the focus will turn away from data once more.
Stronger Eurozone economy has kept euro’s downside limited For now, driving the EUR/USD forecast and direction has been the relative monetary policy outlooks in the Eurozone and US. With both central banks turning hawkish, the pair has remained in consolidation, with a slightly bullish tilt. That’s thanks largely to surprisingly strong Eurozone data, whereas in the US, economic growth has been faltering.
The relatively strong Eurozone data, combined with elevated energy prices, has seen traders price in a rate hike from the ECB and a couple more hikes are also expected during this cycle. The key question therefore is whether the ECB will validate the hawkish repricing of eurozone rates, or whether Christine Lagarde and co will turn out to be a little less dovish.
Validating the hawkish pricing of Eurozone rates will likely provide a bit more support for the euro, which if Lagarde suggests the central bank is happy to see through the latest spike in oil prices and imply that rates will not be tightened further, then that could hit the euro.
For what it is worth, I reckon the ECB will be keen to highlight stagflation risks amid continued Middle East uncertainty more than the mild improvement in the data. That may mean a more dovish policy decision than expected. As such, the EUR/USD could fall in response to the ECB’s choice of wording and economic projections.
EUR/USD forecast: ECB, PPI and CPI among key highlights this week The ECB’s rate decision is on Thursday, September 10, and the decision is likely to be a hike, as discussed above. The eurozone economy has shown surprising resilience to the Middle East war, while headline inflation has continued to climb with oil prices remaining elevated. What this means for the euro and what we think will happen is something I have discussed above.
Stateside, the first of the two US inflation reports, namely producer price index (PPI), will be sandwiched between the ECB’s interest rate decision and press conference, making the EUR/USD a key pair to watch around 13:00-14:00 BST. Inflation remains the only major US data release before the Fed’s next meeting.
But the big one could be saved to last: US consumer price index (CPI) on Friday, September 11. There’s a bit of a divergence within the Fed, with Chair Kevin Warsh adopting a hawkish stance at the Jackson Hole summit, while Governor Christopher Waller was less so last week, preferring to see the inflation data before deciding on a rate hike or maintaining the current rates. This makes the CPI release a crucial piece of economic data, being the last major update before the Fed’s next meeting.
Technical EUR/USD forecast and key levels to watch Without beating around the bush, consolidation is the name of the game for the EUR/USD. The pair was testing resistance around 1.1635 at the time of writing. This level was the last support pre breakdown on Friday August 28. Here, we also have the 200-day average converging with a short-term bearish trend line.
Source: TradingView.com A potential move lower from here would make technical sense, with the next support seen around 1.1565-75 area on the EUR/USD chart. Break that and 1.1500 could become in focus ahead of the 1.1405 level next.
Meanwhile, if the above-mentioned resistance of 1.1635 breaks instead, then 1.1700 could be re-tested fairly quickly. Above that 1.1800 is the next upside objective if the potential rally continues.
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US CPI – GoldAll eyes are on Friday's US CPI report, which will dictate the Federal Reserve’s September 16 rate decision. While August’s 162,000 payroll rebound raised the chances of a rate hike to 59%, central bank leaders stress that inflation data will decide the outcome. A higher-than-expected inflation figure would lock in a quarter-point increase and boost the US dollar, while a cooler reading could keep interest rates on hold and weaken the greenback.
Meanwhile, gold fell toward 4,400 as higher bond yields and rate-hike expectations weighed on non-yielding metals, leaving gold prices equally dependent on the incoming CPI data. A sell-off beneath the 50-day simple moving average (SMA) at 4,350 and, more importantly, below the 4,310 strong support would increase speculation of further decreases toward 4,200.
ECB rate decision – EUR/USDMarkets broadly expect the European Central Bank to raise borrowing costs by a quarter-point to 2.5% this Thursday as rising energy expenses push inflation beyond 3%. While investors anticipate another potential move by December, economists expect this to be the final increase to avoid damaging economic growth, especially with wage expansion slowing and broader inflation remaining muted. The euro's reaction will depend heavily on Christine Lagarde’s press conference, any signal of a December hike could lift EURUSD, whereas a focus on economic risks could push the single currency lower.
Currently, EUR/USD is fluctuating within the 20- and 200-day SMA, slightly above the 1.1600 handle. A successful climb beyond it would endorse another bullish wave, heading toward the 1.1710 barrier. On the other hand, a slide below the 50-day SMA may switch the short-term outlook to negative.
Escalating US-Iran conflict drives oil higher – WTI Crude OilRising Middle East conflict drove crude oil past 92.00 level today, extending last week’s momentum as reciprocal strikes between American and Iranian forces sparked fears of enduring regional supply bottlenecks. US naval forces targeted Iranian oil tankers following missile launches directed at warships, prompting Tehran to declare restricted shipping routes near the critical Strait of Hormuz waterway. In response, OPEC+ chose to halt its monthly output increases by keeping October production levels unchanged, even as prolonged transit hazards forced the cartel to lower its current-year global demand growth forecast to 580,000 barrels daily.
WTI crude oil is ticking marginally higher above the 92.00 region with the next strong resistance coming from the 94.60 barrier. A step up could open the way for a touch of the 99.00 psychological mark, raising the likelihood of a bullish outlook. Alternatively, only a drop below the 200-day SMA at 80.40 could endorse the bearish outlook.
The Euro (EUR) is marginally higher to near 1.1625 against the US Dollar (USD) during the European trading session on Monday. The major currency pair trades broadly sideways amid an extended weekend in the United States (US) due to Labor Day.
This week, the major trigger for the major currency pair will be the European Central Bank’s (ECB) monetary policy announcement on Thursday and the release of the United States (US) Consumer Price Index (CPI) data on Friday.
Euro focus turns to ECBAccording to Deutsche Bank, the upcoming ECB policy decision on Thursday will be “the key event” for European markets. The bank’s European economists “expect a 25bp rate increase, taking the deposit rate to 2.50%,” and they note that investors will be closely watching “any guidance regarding the likelihood of further tightening” beyond this week’s move.
On the US Dollar front, investors will pay close attention to the US CPI data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
Meanwhile, upbeat US Nonfarm Payrolls (NFP) data has prompted Fed’s interest rate hike expectations.
Strategists at BNY highlight that last week’s upside surprise in U.S. labour data, with "nonfarm payrolls (NFP) at 162,000 vs. the expected 55,000," pushed "market-implied odds of a September Fed hike back up to around 60% from 50%," underscoring "how much rate expectations remain tethered to the data backdrop.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1623, keeping a modest bullish tone as it holds above the 20-day Exponential Moving Average (EMA) at 1.1600.
The pair consolidates after its recent advance, and the Relative Strength Index (RSI) around 56 suggests constructive but not overextended upside momentum.
On the downside, immediate support emerges at the 20-day EMA near 1.1600, with a break below this level likely to weaken the current upward bias and open the door to a deeper pullback towards the psychological level of 1.1500. Looking up, the August high at 1.1713 is the immediate resistance level, followed by the April high at 1.1849.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator ECB Main Refinancing Operations Rate One of the three key interest rates set by the European Central Bank (ECB), the main refinancing operations rate is the interest rate the ECB charges to banks for one-week long loans. It is announced by the European Central Bank at its eight scheduled annual meetings. If the ECB expects inflation to rise, it will increase its interest rates to bring it back down to its 2% target. This tends to be bullish for the Euro (EUR), since it attracts more foreign capital inflows. Likewise, if the ECB sees inflation falling it may cut the main refinancing operations rate to encourage banks to borrow and lend more, in the hope of driving economic growth. This tends to weaken the Euro as it reduces its attractiveness as a place for investors to park capital.
ING’s Chris Turner argues that Euro fundamentals remain contained despite German regional election results highlighting political tensions for Chancellor Merz’s CDU. Solid Eurozone growth and investor confidence are offset by downside risks from this week’s ECB meeting. ING expects EUR/USD to hold a narrow 1.1580-1.1640 band with a slight downside bias.
Euro seen contained in tight ranges"While not a major negative for the euro, Sunday's election results in Saxony-Anhalt will serve as a reminder of the declining popularity of Chancellor Merz's CDU party, and, if backed up by similar results in two further regional elections, raise tensions within the governing coalition."
"So far, the German government's infrastructure and defence spending plans seem to be paying dividends for German growth prospects and international investors will not want to see those interrupted."
"On the subject of growth, today should see eurozone second-quarter growth confirmed at a decent 0.4% quarter-on-quarter figure and also see another decent increase in the Sentix investor confidence data."
"The main event of the week, however, will be Thursday's ECB meeting, where we see some downside risks to the euro."
"Expect EUR/USD to trade a tight 1.1580-1.1640 range today, with our bias to the downside."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Danske Research Team reports EUR/USD trading in a narrow 1.1610–1.1620 range after quickly reversing losses from a stronger US jobs report. They highlight a thin data calendar with United States (US) markets closed, and note that attention will shift to the upcoming European Central Bank (ECB) meeting, where a rate hike is widely expected, and to US Consumer Price Index (CPI) figures later in the week.
Pair steadies in tight trading band"In the euro area, retail sales fell by 0.6% m/m in July (cons: 0.2%), following a small increase in June. Fuel sales weighed on the headline figure, but sales excluding fuel also declined by 0.6% m/m, returning to levels seen in Q1."
"The positive growth recorded in July PMIs therefore does not appear to have been driven by private consumption. As consumers remain cautious, companies may find it harder to pass on higher energy costs, which could help explain why these pressures have not spilled over into core inflation."
"In Germany, AfD's victory in Saxony-Anhalt was broadly in line with expectations, winning 44% but falling short of an outright majority. The result confirms AfD's momentum, though mainstream parties rule out a coalition and the direct federal impact is limited."
"EUR/USD is relatively stable in a 1.1610-1.1620 range, as it quickly reversed the initial decline seen after the stronger US jobs report on Friday. "
"The data calendar is thin today as the US market is closed due to Labor Day. Later this week, focus turns to the ECB meeting on Thursday, where a hike is widely expected, and the US CPI figures on Friday."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
Most currency pairs are stable today. Dollar Index and Euro could trade between 98.50-99.50 and 1.17-16 respectively while USDJPY and EURJPY can slowly rise towards 157-158 and 182-183 respectively after the intervention by the BOJ last week. EURINR can test 109 before reversing higher while USDCNY needs to break below 6.71 to test support at 6.70 in the medium term. Aussie could rise towards 0.7250-0.73 while the Pound could trade between 1.3475 and 1.3550 respectively. USDINR needs to break below 94.45 to trigger a possible test of lower support near 94 else, a bounce back from current levels if seen can negate bearishness in the near term. Overall a stable range below 95 can be seen for at least a week.
The US Treasury Yields sustain higher. A decisive break and a strong follow-through rise above their resistance can take them higher. Any dip from here can be short-lived as supports are there to limit the downside. The German yields remain higher and stable. The outlook remains bullish to see more rise. The 10Yr GoI is hovering around a support. A narrow range bound move is a possibility in the near term. But the bias remains positive to see more rise from here.
Dow remains range-bound between 52500-54000 while below 54000. DAX has bounced back and can rise towards 26500. Nifty remains vulnerable below 24000, with a break below 23800 opening the way towards 23600-23500. Nikkei has turned stronger above 66000 amid easing US rate hike expectations and can rise towards 67000-68000. Shanghai is likely to remain within the 3850-4000 range while below 4000.
Brent and WTI remain positive and can rise towards $100 and $95 respectively in the near term. Gold needs to sustain above $4300 to keep the possibility of a rise towards $4600 alive. Silver needs a sustained break above $70 for a move towards $75-$80. Copper is likely to remain range-bound between $6.50-$6.80, while Natural Gas needs to break above $3.00 for a rise towards $3.25-$3.50.
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The Euro (EUR) trades marginally lower at around 1.1610 against the US Dollar (USD) during the Asian trading session on Monday. The major currency pair edges down as the US Dollar ticks up, with investors turning cautious at the start of the United States (US) Consumer Price Index (CPI) week.
Investors will pay close attention to the US CPI data, which will be released on Friday, to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.
Markets focus on final US inflation prints before Fed decisionAnalysts at Deutsche Bank stress that “all eyes will be on the August US CPI print on Friday, preceded by the PPI on Thursday,” noting that these releases represent “the last set of inflation readings before the Fed’s next decision on September 16.” Their US economists expect a notable pickup in price pressures, with August’s headline CPI forecast “to come in at +0.38% MoM vs. +0.07% previously,” while they see underlying pressures remaining contained as core CPI is projected “to print +0.21% vs. +0.22%.”
Meanwhile, traders are expected to reassess Fed interest rate expectations soon as the US Nonfarm Payrolls (NFP) data for August has come in stronger-than-expected. The data showed on Friday that the economy created 162K fresh jobs, significantly higher than 56K estimates.
EUR/USD Technical Analysis
In the daily chart, EUR/USD trades at 1.1609, keeping a mildly bullish near-term tone as it holds above the 100-day Simple Moving Average (SMA) at 1.1563.
The Relative Strength Index (RSI) at roughly 54 stays in neutral territory, hinting that downside pressure persists but without strong momentum exhaustion signals on either side.
On the topside, key resistances are the August high at 1.1679, followed by the April high at 1.1849. Looking down, the 100-day SMA at 1.1563 is the first notable support that bulls need to hold to avoid getting exposed to further downside. Below the 100-day SMA, the psychological level of 1.1500 might act as key cushion for the pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Inflation FAQs Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Key highlightsEUR/USD started a fresh increase from the 1.1565 support.It traded above a bearish trend line with resistance at 1.1605 on the 4-hour chart.EUR/USD technical analysisLooking at the 4-hour chart, the pair traded above a bearish trend line with resistance at 1.1605. There was a move above the 100 simple moving average (red, 4-hour), and the pair remained well above the 200 simple moving average (green, 4-hour).
The pair surpassed the 1.1620 resistance but failed near the 50% Fib retracement level of the downward move from the 1.1711 swing high to the 1.1566 low at 1.1640.
There was a minor pullback, but the pair remained well above 1.1565. If there is another decline, the pair might find bids near 1.1585. The first major support could be near 1.1565. A downside break and close below 1.1565 might start a major leg down. In the stated case, the bears could aim for a move to 1.1440.
On the upside, the bears could be active near 1.1640. The next major resistance might be 1.1675. A close above 1.1675 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1710.
EUR/USD started a fresh increase from the 1.1565 support. It traded above a bearish trend line with resistance at 1.1605 on the 4-hour chart. WTI Crude Oil prices could continue higher if it settles above $92.65. Bitcoin remained supported and might aim for another leg higher. EUR/USD Technical Analysis The Euro corrected gains and tested 1.1565 against the US Dollar. EUR/USD formed a base and started a fresh upward move above 1.1585.
Looking at the 4-hour chart, the pair traded above a bearish trend line with resistance at 1.1605. There was a move above the 100 simple moving average (red, 4-hour), and the pair remained well above the 200 simple moving average (green, 4-hour).
The pair surpassed the 1.1620 resistance but failed near the 50% Fib retracement level of the downward move from the 1.1711 swing high to the 1.1566 low at 1.1640.
There was a minor pullback, but the pair remained well above 1.1565. If there is another decline, the pair might find bids near 1.1585. The first major support could be near 1.1565. A downside break and close below 1.1565 might start a major leg down. In the stated case, the bears could aim for a move to 1.1440.
On the upside, the bears could be active near 1.1640. The next major resistance might be 1.1675. A close above 1.1675 could start another steady increase. In the stated case, the bulls could aim for a move to 1.1710.
Looking at WTI Crude Oil prices, the price remained supported for more gains, and there could be a fresh upward move toward the $95.00 level.
Upcoming Key Economic Events:
Germany’s Trade Balance for July 2026 – Forecast €16.5B, versus €15.4B previous. US NFIB Business Optimism Index for August 2026 – Forecast 99.3, versus 99.8 previous.
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Euro Technical Forecast: EUR/USD Weekly Trade Levels
EUR/USD has defended pivotal support for a second consecutive week following the pullback from August highs.
Weekly momentum is attempting to stabilize in positive territory after reaching its strongest levels since May.
The September opening range is beginning to take shape as price remains caught within a broader multi-month consolidation.
The ECB rate decision and U.S. CPI / PPI headline next week’s event risk as markets reassess the relative policy outlook.
Resistance ~1.1632/33, 1.1746/75 (key), 1.1850- Support 1.1564/78 (key), 1.1472, ~1.14
EUR/USD heads into September at an important technical crossroads after the August recovery lost momentum near resistance. The larger technical picture remains finely balanced, with neither bulls nor bears able to establish control, leaving the Euro vulnerable to a larger directional move. With the ECB rate decision and U.S. CPI on tap next week, the stage is set for a critical stretch that could provide much-needed clarity heading into the September rate decision the following week. Battle lines drawn on the EUR/USD weekly technical chart.
Review my latest Weekly Strategy Webinar for an in-depth breakdown of this EUR/USD technical setup and more. Join live on Monday’s at 8:30am EST.
Euro Price Chart – EUR/USD Weekly
Chart Prepared by Michael Boutros, Sr. Technical Strategist; EUR/USD on TradingView
Technical Outlook: In last month’s Euro Technical Forecast we noted that EUR/USD had rebounded off major support and that, “losses would need to be limited to the 1.1469 IF price is heading higher on this stretch. Look for a larger reaction near 1.1650 IF reached.” The rally extended more than 3.1% off the July low with a four-week advance registering a close high at 1.1679 pulling back.
A decline of more than 1.2% has held key support for the past two weeks at 1.1564/78, where the 38.2% retracement of the June advance converges on the January swing low. The focus heading into September is on a possible inflection off this pivotal zone as the monthly opening range begins to take shape just above. Note that the momentum trigger we highlighted last month as now broken with weekly RSI attempting to stabilize in positive territory after stretching the highest levels since May.
EUR/USD Weekly RSI
The 52-week and 200-day moving averages now converge at 1.1632/33, with key resistance unchanged at 1.1746/75. This region, defined by the yearly open, the 2025 high-week close, and the 2025 high close, has served as a major inflection zone since June of last year. The 75% parallel of the broader upslope is set to converge on this threshold over the next few weeks, further highlighting its technical significance. A breach / weekly close above would be needed to invalidate the yearly downtrend and threaten the next leg higher in price. Subsequent resistance objectives are eyed at the yearly high-week close (HWC) and the April high at 1.1850 and a longer-dated extension at 1.1917.
A break below the monthly range low would threaten a deeper correction towards the 61.8% retracement at 1.1472 with the median-line of the multi-year upslope currently near ~1.14. Key weekly support remains unchanged at 1.1355/69- a region defined by the 38.2% retracement of the 2025 advance, the April high-week close and the 2026 low close. A break / weekly close below this zone would be needed to fuel the next major leg of the January downtrend.
Bottom line: EUR/USD is carving the September opening range just above pivotal support with major event risk on tap next week. We may still be in a massive multi-month consolidation pattern here so look for a breakout to offer guidance. From a trading standpoint, losses would need to be limited to 1.1472 IF Euro is heading higher on this stretch with a close above 1.1775 needed to fuel the next major leg of the rally.
Today’s stronger-than-expected Non-Farm Payrolls report reinforced the resilience of the U.S. labor market, shifting the focus squarely back to inflation and the outlook for Fed policy. Next week brings significant event risk on both sides of EUR/USD, with the European Central Bank widely expected to raise rates on Thursday before the release of the August U.S. Consumer Price Index (CPI) on Friday.
With an ECB hike largely anticipated, the tone of the accompanying guidance could prove more important for the euro than the decision itself. In the U.S., another firm inflation reading following today’s strong employment report would strengthen the case for additional Fed tightening and could offer some support for a broader Dollar recovery. Conversely, a meaningful decline in the pace of price growth could keep give the Fed more latitude to hold rates into the close of the year. While this is not the Fed’ preferred gauge, it will be the final inflation read ahead of this month’s rate decision. Stay nimble into the releases and watch the weekly close for guidance. Review my latest Euro Short-term Outlook for a closer look at the near-term EUR/USD technical trade levels.
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--- Written by Michael Boutros, Senior Technical Strategist
The EUR/USD pair posted a modest comeback after falling in the last week of August, finishing the week just above the 1.1600 level. The US Dollar (USD) lost momentum and corrected lower on Monday, but overall it retained its recently regained strength amid persistent Middle East tensions and speculation that the Federal Reserve (Fed) will have to raise the benchmark interest rate in September. The USD resumed its advance on Friday, as upbeat employment data brought back demand.
United States employment and inflationIn between, the Greenback suffered a minor setback: Fed Governor Christopher Waller cooled the odds for a September rate hike on Thursday by saying that officials can “wait one meeting,” as long as there are no surprises from upcoming inflation data. He also noted that a 25-basis-point (bps) hike won’t bring inflation back to 2%.
The Bureau of Labor Statistics (BLS) will release the August Consumer Price Index CPI) and the Producer Price Index (PPI) for the same month in the upcoming days. Indeed, the CPI may not be the Fed’s favorite inflation gauge, but it's a reliable indicator of inflationary pressures and may define whether the Fed will hike or hold when it meets later this month.
The United States (US) published the August Nonfarm Payrolls (NFP) report on Friday, with upbeat figures backing the USD. The country added 162K new jobs in the month, much better than the anticipated 56K. The Unemployment rate held steady at 4.1% as expected. Furthermore, annual wage inflation, as measured by the change in Average Hourly Earnings, declined to 3.1% from 3.2%.
Other than that, the country published the August ISM Purchasing Managers’ Indexes (PMIs). The manufacturing index eased to 54.6 from 55.6 in July, while the Services PMI improved to 55.4 from 54.1 in the previous month. Within the manufacturing sector, inflation held steady as the Prices Paid Index printed at 71.1, matching the previous monthly reading. On services output, the Prices Paid Index edged higher to 72.6 from 70.3. A reading above 50 means that more businesses are paying higher prices than in the previous month, meaning inflationary pressures are being felt up and down across all businesses.
So, while Fed Governor Waller hinting at an on-hold September decision temporarily took its toll on the USD, the fact is that inflationary pressures are high enough for speculative interest to price in upcoming hikes. Rising energy prices amid the Middle East war are no doubt the main factor driving market concerns, with Crude Oil Prices regaining positive momentum after the US and Iran resumed hostilities in late August.
European Central Bank and Eurozone inflationInflation is not a problem exclusive to the US. Germany reported that the Harmonized Index of Consumer Prices (HICP) rose 2.9% YoY in August, according to preliminary estimates, higher than the previous 2.8% although better than the expected 3.1%. Furthermore, Retail Sales in the country fell 3.4% in July, worsening from a flat reading in July. The Eurozone HICP in the same period printed at 3.3% as expected, rising from the 2.9% posted in July.
The situation is similar; what’s different is how central banks are reacting to the news: the European Central Bank (ECB) has already hiked interest rates by 25 bps and is expected to deliver a similar rate increase when it meets on Wednesday. The move is largely priced in, which means the impact on the Euro could be limited.
The ECB faces yet another challenge: President Christine Lagarde, whose term as the ECB head ends in October 2027, may be due to an early exit. Market talks suggest she would step down before France’s Presidential elections either to participate in them or to allow President Emmanuel Macron to have a voice on Lagarde’s successor at the central bank. Lagarde refrained from confirming or denying such rumors, but left the door open for an early departure.
Other than the ECB decision, the European macroeconomic calendar will include the final estimates of the German and Eurozone HICP.
There’s yet another factor pushing central banks to raise rates. Government bond yields are on the loose amid inflation-related concerns and geopolitical tensions. Higher borrowing costs affect the country’s economy and add to the inflationary process. Central banks’ tools may not be enough to tame the chaos, but inaction from policymakers will make the picture even worse.
By the end of the week, however, US President Donald Trump, once again called for lower rates: “The Fed Board, with its great new leader, must get smart - BE PATRIOTS for a change. High interest rates put the U.S.A. at a very unfair disadvantage, and I won’t allow that to happen!,” he posted on Truth Social, also threatening to stop trade with countries with higher rates.
Indeed, President Trump’s desire for lower rates is probably the main reason why Chair Kevin Warsh has refrained from hiking rates despite pledging multiple times to fight inflation. The Fed is between a rock and a hard place.
EUR/USD Technical Outlook:
From a technical point of view, the daily chart shows EUR/USD trading with a neutral-to-slightly bullish tone as it consolidates between nearby moving averages. The pair is trading above the 20-day Simple Moving Average (SMA) at 1.1608 and the 100-day SMA at 1.1564, which together suggest a tentative underlying bid, while it remains capped by the 200-day SMA at 1.1634. Momentum fades, with the 14-day Relative Strength Index (RSI) indicator easing at around 56 and the 14-period Momentum indicator nearing its midline from above, suggesting buyers are losing interest.
On the weekly chart, EUR/USD trades above the 20-, 100-, and 200-week SMAs, with the shortest SMA at 1.1562 providing immediate dynamic support. The broader price placement comfortably above the 100-week SMA at 1.1337 and the 200-week SMA at 1.1075 suggests the medium-term uptrend remains intact, yet technical indicators, holding around their midlines and directionless, suggest investors are unwilling to take stronger positions.
On the topside, immediate resistance is at the 200-day SMA around 1.1634; a daily close above this barrier would open the way for a retest of recent highs in the 1.1710 region, ahead of the 1.1800 threshold. On the downside, initial support is seen at the 20-day SMA near 1.1608, with the 100-day SMA at 1.1564 providing a deeper cushion if the pair slips back. A break beneath this latter level would likely open the door for a steeper decline, with 1.1470 as the next level to watch.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator ECB Monetary Policy Statement At each of the European Central Bank’s (ECB) eight governing council meetings, the ECB releases a short statement explaining its monetary policy decision, in light of its goal of meeting its inflation target. The statement may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. A hawkish view is considered bullish for EUR, whereas a dovish view is considered bearish.
