- The EUR/USD pair sees gains following a weaker-than-expected US CPI report and a rise in unemployment claims to the highest level in almost four years.
- The dollar’s weakness counterbalances a steady eurozone policy from the ECB, which is focused on data and the mood of each meeting.
- The market continues to rely on the Fed’s strategy, with the North American trading session keeping EUR/USD above the crucial 1.1700 mark.
The EUR/USD pair gained ground during the North American trading session after the European Central Bank chose to keep its stance unchanged. This came as the dollar weakened following the Consumer Price Index (CPI) report that met expectations. As of the latest update, the pair rose by 0.34% to reach 1.1733.
Euro Gains 0.34% Following ECB Stability and Weak US Labor Data
The recent US inflation data showed that consumer prices increased in line with projections, maintaining the status quo. Additionally, initial unemployment claims surpassed expectations, reaching their peak in nearly four years.
On the euro’s side, the ECB held its deposit rate at 2%, stating that future monetary policy adjustments will be made based on data and discussions during meetings. The governing council noted that they are not committed to any prescribed rate paths.
Daily Market Update: EUR/USD Rises After US CPI Data
- The US Consumer Price Index (CPI) showed an expected increase from 2.7% in August to 2.9% year-on-year. The core CPI remained stable at 3.1% year-on-year, matching projections and prior levels. Market reactions were muted and expectations of Fed rate cuts saw little change.
- Moreover, initial unemployment claims for the week ending September 6 exceeded the expected 237K, highlighting a downturn in the labor market.
- ECB President Christine Lagarde remarked that the decision-making process is complete, confirming that current policy remains effective and that today’s decision saw a unanimous agreement. She added that trade uncertainties have lessened and risks to economic growth are tilted negatively.
- The US Dollar Index (DXY), which gauges the dollar against a group of six currencies, fell 0.28% to 97.53.
- Fitch Ratings anticipates a 25 basis point cut in rates for both September and December, with three additional reductions possibly on the table for 2026. Conversely, rating agencies are not expecting cuts from the European Central Bank (ECB).
- In the aftermath of the data release, traders have priced in a 25 basis point easing, with a 10% likelihood of the Fed easing policy, according to Prime Market’s Terminal Interest Rate Probability Tool. The ECB, on the other hand, carries only a 7% chance of cutting by 25 basis points.
Technical Outlook: EUR/USD Breaks Past 1.1700, Eyes 1.1800
The EUR/USD pair resumed its upward movement on Thursday, shaping a notably bullish chart pattern. Momentum indicators, like the relative strength index (RSI), reflect this positive trend. It climbed higher than 56, unlike the previous dip seen at 52 on Wednesday.
If EUR/USD moves past 1.1750, the next critical resistance level to watch will be 1.1800, followed by the 1.1829 peak seen earlier this year. On the flip side, if the pair falls below 1.1700, initial support could be found at a 20-day SMA around 1.1677 and a 50-day SMA near 1.1658.
