Introduction to EUR/USD
The EUR/USD pair is currently trading near an intraday high of 1.1746, after falling to a low of 1.1660 during European trading hours. This slight fluctuation has left many wondering about the future of this currency pair. In this article, we will delve into the recent events that have influenced the EUR/USD pair and what this might mean for its future.
Recent Events Influencing EUR/USD
Several key events have recently impacted the EUR/USD pair. The European Central Bank (ECB) kept benchmark interest rates on hold in its September meeting, which was widely anticipated by market participants. Additionally, the US Consumer Price Index (CPI) showed that inflation stood at 2.9% year-over-year (YoY) in August, meeting expectations. The core annual reading also met the forecast at 3.1%. The EUR/USD pair has managed to hold on to its intraday gains above 1.1700, but it still lacks directional strength.
Impact of US Economic Data
The US reported that Initial Jobless Claims for the week ended September 6 edged sharply higher, up to 263K from the previous 236K, and much higher than the expected 235K. This poor employment data, combined with sticky inflation data, took its toll on the US Dollar (USD), pushing it lower against all its major rivals. This has fueled speculation that the Federal Reserve (Fed) will deliver interest rate cuts in the next three monetary policy meetings to a total of 75 basis points (bps) before year-end.
Upcoming Data Releases
Friday will be lighter in terms of data releases, with Germany set to publish the final estimate of the August Harmonized Index of Consumer Prices (HICP), expected to be confirmed at 2.1% YoY. The US will also release the preliminary estimate of the September Michigan Consumer Sentiment Index, which includes one-year and five-year inflation expectations. These releases will be interesting ahead of the Fed’s meeting next week and may provide further insight into the future of the EUR/USD pair.
EUR/USD Short-term Technical Outlook
From a technical point of view, the daily chart for the EUR/USD pair shows that it continues to trade within familiar levels, finding buyers after briefly piercing a flat 20 Simple Moving Average (SMA) currently at around 1.1670. Technical indicators are heading nowhere within neutral levels, reflecting the long-lasting range in the current price zone. In the 4-hour chart, the EUR/USD pair has established itself above a now-flat 20 SMA, providing near-term support in the 1.1720 area.
Key Support and Resistance Levels
The near-term picture has turned neutral, with the EUR/USD pair trading above the 20 SMA. Key support levels include 1.1720, 1.1670, and 1.1630, while resistance levels are at 1.1775, 1.1830, and 1.1880. Technical indicators have turned flat at around their midlines, failing to provide clear directional clues.
Conclusion
In conclusion, the EUR/USD pair is currently trading near an intraday high of 1.1746, influenced by recent events such as the ECB’s decision to keep interest rates on hold and the US CPI data. The pair lacks directional strength, but upcoming data releases may provide further insight into its future. With key support and resistance levels in mind, market participants will be watching closely to see how the EUR/USD pair will move in the coming days.
