EUR/USD appreciates to approximately 1.1630 during the early Asian session on Wednesday. The ECB is poised to increase its benchmark interest rates by 25 basis points during its upcoming policy meeting on Thursday. The key US inflation reports will attract significant attention later this week. The EUR/USD pair is experiencing upward momentum, approaching 1.1630 in the early hours of trading in Asia on Wednesday. Expectations of a rate hike from the European Central Bank provide some support to the Euro against the US Dollar. ECB President Christine Lagarde is scheduled to deliver remarks later today. The ECB is anticipated to raise interest rates at its September policy meeting on Thursday, influenced by escalating energy prices stemming from the ongoing US-Iran conflict. Traders have fully accounted for a 25 basis point increase to 2.5% following the latest data indicating that Eurozone inflation has risen above 3% in August.
“We expect the ECB to hike rates by 25 basis points. Another insurance rate hike,” said macro Carsten Brzeski. “Or for those who don’t like this term: a dovish rate hike,” Brzeski added. Traders are poised for the release of significant US Producer Price Index and Consumer Price Index inflation data, scheduled for later this week. These reports may provide new insights into the Federal Reserve’s upcoming decisions at their meeting on September 14-15. Any indications of rising inflation in the US may strengthen the Greenback and pose challenges for the major pair. Analysts maintain a constructive but measured stance on EUR/USD over the coming weeks. They recall that in their most recent narrative last Friday, when spot was at 1.1635, they noted that the strong surge from the prior Thursday “suggests the bias has shifted to the upside, but upward momentum is not that strong for now, and any advance could stay within a 1.1585/1.1690 range.”
Updating their view on Monday with spot around 1.1625, they reiterated that “the upside bias remains intact, but EUR should stay within a narrower range of 1.1585/1.1670.” UOB says it “continue[s] to hold the same view,” indicating that while the Euro retains an upside tilt, gains are still expected to be contained within these defined parameters. In the daily chart, EUR/USD exhibits a constructive near-term bullish bias as the pair stabilises above the Bollinger middle band and the 100-day moving average. The lower Bollinger band reinforces a broad demand zone beneath the market, while the upper band constrains the immediate upside. The Relative Strength Index (14) near 57 indicates positive yet not excessive momentum, suggesting that buyers maintain a dominant position as long as the price remains above the mid-band support.
On the downside, initial support is situated at the Bollinger middle band near 1.1622, followed by the 100-day moving average around 1.1560 and the lower Bollinger band close to 1.1538, where a deeper pullback would likely meet stronger demand. On the topside, the first notable resistance is the upper Bollinger band around 1.1705, and a daily close above this barrier would pave the way for an extension of the current rebound phase toward higher highs in the coming sessions.
