Brokers from Financial Real Timea dive into the latest EUR/USD picture, as the pair gives back early gains while markets wait for a US inflation report that could reshape Federal Reserve expectations.
Euro Retreats From Its Daily High
EUR/USD slipped on Wednesday during the European session and now sits near 1.1190, having touched 1.1211 earlier in the day. The dollar won back its early losses while traders held back ahead of the September US Consumer Price Index, due at 12:30 GMT.
The dollar gauge that pits the greenback against six major currencies is up slightly, at about 102.24. The Fed’s Beige Book follows at 18:00 GMT, and it may show how companies across the country are coping with rising prices.
Danske Bank Expects Energy To Lift Headline Inflation
Danske Bank looks for a slight pickup in September inflation. It projects headline CPI at 0.5% for the month and 3.6% annually, versus 0.6% and 3.4% in the prior reading, while core is seen at 0.2% monthly and 2.5% yearly, against 0.3% and 2.4%. The bank puts the expected rebound in the headline number down mostly to energy costs.
The report matters a great deal for rate expectations. Fed officials have returned more than once to the danger of persistent inflation, so a firm print would back the argument for tighter policy and lift the dollar, while a soft one would take some pressure off the euro.
ECB Seen Holding Rates Later This Month
Across the Atlantic, traders are increasingly convinced that the ECB will hold borrowing costs steady when it meets at the end of the month. In a Reuters survey carried out from October 5 to 8, 70 out of 73 economists forecast an unchanged deposit rate of 2.50% on October 29.
This leaves the euro without an obvious policy catalyst of its own. While the Fed debates how firmly to respond to inflation, the ECB appears set to wait, a contrast that helps explain why the common currency has struggled to build momentum against the dollar in recent sessions.
Any change in tone from ECB officials before the meeting could alter that view. Comments on inflation or growth in the euro area may shift rate expectations quickly, so traders should follow central bank speeches closely, since the euro often reacts to guidance as much as to decisions.
Technical Picture Stays Firmly Bearish
The daily chart shows EUR/USD at 1.1192 with a decidedly negative bias. The pair keeps sliding away from its recent peaks and is leaning toward new lows. Its RSI reading of 29.62 is just under the 30 level that marks oversold conditions, which tells us sellers are overextended but still firmly in charge for now.
Support rests at the October 12 low of 1.1153, and losing it decisively would show sellers still hold the upper hand and could expose fresh lows. Overhead, the October 6 peak at 1.1277 is the main obstacle, and bulls would need to retake it to challenge the downtrend.
Because the RSI is so close to oversold territory, a short-term bounce cannot be ruled out, especially if the CPI figures disappoint dollar bulls. Even so, a relief rally would likely face resistance well before reaching the October highs, so traders should treat any rebound with caution until price proves it can reclaim higher ground.
Volume and price behavior around the 1.1153 support will also deserve attention. A break on heavy trading activity would carry far more weight than a quiet drift lower, since it would suggest that sellers are acting with conviction rather than simply testing the level. In contrast, a sharp rejection from that area would hint that buyers are starting to defend the pair.
Conclusion
EUR/USD trades near 1.1190 under persistent bearish pressure, with the market caught between a dollar supported by inflation worries and a euro that lacks a policy boost from the ECB. The 1.1153 support is the level to watch on the downside, while 1.1277 marks the ceiling bulls must clear to change the picture.
With US inflation data and the Beige Book both on the calendar, traders following EUR/USD strategies should expect sharp reactions around these releases and keep a close eye on how price behaves near the key levels, since a clean break in either direction is likely to set the tone for the coming sessions.