EUR/USD Steady Near 1.1690 as Traders Eye US Inflation and ECB
Thursday’s European session sees the EUR/USD pair trading around 1.1690 as investors are cautious ahead of high-impact events including...
Quick overview
- The EUR/USD pair is trading around 1.1690 as investors remain cautious ahead of US inflation data and the ECB's policy statement.
- Geopolitical tensions, particularly involving Poland and Belarus, have increased safe-haven demand for the US dollar, weighing on the euro.
- US inflation data is crucial, with expectations for a CPI rise that could influence Fed rate cut expectations and dollar strength.
- Technically, EUR/USD is losing momentum, with a potential target of 1.1660 if the pair breaks below its current support level.
Thursday’s European session sees the EUR/USD pair trading around 1.1690 as investors are cautious ahead of high-impact events including US inflation data and the European Central Bank’s policy statement. Geopolitical tensions – particularly reports of Poland shooting down drones near its border with Belarus – have added to the caution and safe-haven demand for the US dollar.
Rising Geopolitical Frictions Weigh on Euro
The euro was hit early after reports that Polish forces had intercepted several drones from Russia. While the initial market impact was limited, the incident increased concerns about the rising tensions between Russia and NATO members. With the ongoing conflict in Ukraine, it highlighted the geopolitical risks that often push investors towards the dollar.
These developments tend to cap euro gains and keep the pair subdued as traders balance risk sentiment with central bank policy expectations.
US Inflation Data and Fed Outlook in Focus
US inflation is in the spotlight. PPI came in weaker than expected on Wednesday at -0.1% and Thursday’s CPI is expected to rise 0.3% monthly and 2.9% annually. A soft print will boost expectations for a Fed rate cut next week with markets already pricing in a 25bps cut and possibly more by year-end.
But any upside surprise in CPI will complicate the Fed’s path and support the dollar in the short term.
ECB Policy Outlook Offers Little Support
The ECB is expected to keep rates at 2.15% and traders will be watching President Christine Lagarde’s press conference for clues on whether the current cycle has peaked. European data has been light this week so the ECB’s tone will be key for euro sentiment.
EUR/USD Price Forecast
Technically, EUR/USD is losing upward momentum. The pair has broken below a rising trendline that has guided price action since late August and has been rejected several times with long upper wicks and a spinning top candle. Sellers are now targeting the 200-SMA at 1.1660.RSI is at 41, momentum is weakening. A break below 1.1660 would expose 1.1623, a previous resistance zone. Above 1.1720 and buyers may get back in control.
Trade Idea: Short at 1.1690-1.1700 with stop at 1.1736. Targets 1.1660 first and 1.1623 if momentum continues. For beginners: euro will weaken unless buyers get back above.
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