Eurozone CPI Inflation at 2.2%, EURUSD Hangs Above 1.11

EURUSD experienced a decline of two cents from its August highs but has since rebounded as sellers failed to push it below the crucial 1.10 support level. This level has proven to be a strong support zone, indicating significant buying pressure. Moving averages (MAs), particularly the 100 SMA on the 4-hour chart, also provided support, with the price consolidating around this region for several trading sessions.

The pair bounced substantially from this level last week, reflecting renewed demand and propelling EUR/USD above 1.11. The strong rally from the 1.10 support zone is clearly visible on shorter timeframes. However, the upward momentum hit a key resistance at the 1.1150 swing level, where sellers stepped in and rejected the price yesterday. For now, sellers are expected to defend this level with a defined risk higher than the current level. Should the price break through, it could signal further bullish momentum.

EUR/USD Chart H4 – Hesitating at Resistance

On the monetary policy front, the European Central Bank (ECB) lowered interest rates by 25 basis points last week to combat a weakening Eurozone economy. ECB officials, however, emphasized a gradual easing approach, pointing toward the December meeting for any further changes. The market currently sees a 70% chance of no additional rate cuts in October, and expectations are for a total of 40 basis points of easing by the end of the year. ECB members have consistently communicated their data-driven approach, making back-to-back rate cuts in September and October highly unlikely.

Eurozone Final CPI Inflation Data for August

• Eurozone August final CPI: +2.2% y/y (matched preliminary +2.2%)
  • Previous CPI: +2.6% y/y
• Eurozone August Core CPI: +2.8% y/y (aligned with preliminary +2.8%)
  • Previous Core CPI: +2.9% y/y
• Inflation shows a gradual softening in the Eurozone.

The final CPI and Core CPI figures for August remain unchanged from the initial estimates, confirming no revisions. This reflects the gradual pace of the disinflation process observed in recent months, which has kept the European Central Bank (ECB) cautious. The ECB has indicated it will pause rate cuts in October as it monitors potential increases in price pressures, largely expected due to base effects in the fourth quarter. The central bank is taking a wait-and-see approach, carefully evaluating the economic conditions before making further decisions on monetary policy.

EUR/USD Live Chart