EUR/USD Climbs to 1.1700 on ECB Policy and US CPI Boost.
EUR/USD rises to 1.1700 as ECB maintains policy, US CPI data strengthens Fed rate cut expectations.
FUNDAMENTAL OVERVIEW:
The Euro (EUR) rebounded sharply against the US Dollar (USD) on Thursday, snapping a two-day losing streak and reclaiming the 1.1700 level as markets digested the European Central Bank (ECB) decision and fresh US inflation data.
As expected, the ECB left its key policy rates unchanged, holding the Main Refinancing Rate at 2.15% and the Deposit Facility Rate at 2.00%. Policymakers noted that inflation is hovering near the 2% target, while the broader outlook remains “broadly unchanged.”
In the US, August’s Consumer Price Index (CPI) largely matched expectations, though headline inflation saw a slight uptick. Headline CPI rose 0.4% MoM, above July’s 0.2% and slightly higher than the 0.3% forecast, while YoY inflation accelerated to 2.9% from 2.7%. Core CPI, excluding food and energy, stayed firm at 0.3% MoM and 3.1% YoY.
The figures offered a mixed view of inflation—headline prices edged up, but core readings stayed steady. Market reaction was measured, though Federal Reserve (Fed) rate cut bets strengthened modestly. According to the CME FedWatch tool, odds of a 25 bps cut in December climbed to 94% from 90% prior to the release, with traders still pricing in three Fed cuts by end-2025.
EUR/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
EUR/USD is trading within an up channel.
EUR/USD is moving above all the Moving Averages (SMA).
The Relative Strength Index (RSI) is in a Bullish Zone, while the Stochastic oscillator suggests a Positive trend.
Immediate Resistance level: 1.1778
Immediate support level: 1.1683
HOW TO TRADE EUR/USD
After dropping below its support line, the EUR/USD pair found strong buying interest and reversed sharply. This rally broke through a key resistance zone and formed a bullish engulfing pattern, which signals a potential upward trend. If the price stays above this level, the EUR/USD is likely to continue its climb toward the next major resistance point.