EUR/USD Current price: 1.1693
- European Central Bank left interest rates unchanged as expected.
- US Consumer Price Index indicated inflation remained sticky in August.
- EUR/USD struggles for direction, near-term picture favors lower lows.
The EUR/USD pair traded with a soft tone throughout the first half of the day, holding below the 1.1700 mark ahead of critical first-tier events. The first one was the European Central Bank (ECB) monetary policy decision. As widely anticipated, the central bank left interest rates unchanged.
Still, the ECB published fresh economic projections, which weighed on the Euro (EUR). Policymakers now see headline inflation averaging 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027. For inflation excluding energy and food, they expect an average of 2.4% in 2025, 1.9% in 2026, and 1.8% in 2027. The economy is projected to grow by 1.2% in 2025, revised up from the 0.9% expected in June. The growth projection for 2026 has been slightly lowered to 1.0%, while the projection for 2027 remains unchanged at 1.3%.
The EUR/USD pair fell towards fresh daily lows in the 1.1660 area, but showed little signs of life ahead of the next major event: the United States (US) Consumer Price Index (CPI). The figures were pretty much in line with expectations, as the annual CPI rose to 2.9% in August from 2.7% in July. The core annual reading printed at 3.1%, both meeting expectations. On a monthly basis, the CPI rose 0.4% following the 0.2% increase recorded in July.
The US Dollar (USD) fell with the news, pushing EUR/USD back above the 1.1600 mark, as inflation data undermined the odds for a larger Federal Reserve (Fed) interest rate cut when the central bank meets next week. As the dust settles, speculative interest has fully priced in three Fed rate cuts by the end of 2025.
EUR/USD short-term technical outlook
The EUR/USD pair is currently battling to retain the 1.1700 mark, unchanged on a daily basis according to the daily chart. The pair keeps developing a handful of pips above a flat 20 Simple Moving Average (SMA) currently at 1.1670, while the longer moving averages remain far below the shorter one. The 100 SMA is heading marginally higher, but still losing its upward strength amid the absence of clear directional strength. Finally, technical indicators turned marginally lower but remain within neutral levels, reflecting the lack of directional interest.
The near-term picture, on the other hand, is bearish. The 4-hour chart shows that the pair develops below a mildly bearish 20 SMA, providing resistance around 1.1720. At the same time, EUR/USD briefly pierced a flat 100 SMA currently at around 1.1670. Finally, technical indicators head nowhere within negative levels, skewing the risk to the downside without confirming another leg south.
Support levels: 1.1670 1.1630 1.1590
Resistance levels: 1.1720 1.1770 1.1825
