EUR/USD remains stable around 1.1635 during the early Asian session on Thursday. The European Central Bank is anticipated to raise interest rates during its policy meeting scheduled for September on Thursday. The US August PPI inflation data is set to be the focal point later on Thursday. The EUR/USD pair remains stable at approximately 1.1635 in the early hours of trading in Asia on Thursday. Traders are inclined to remain on the sidelines in anticipation of the European Central Bank policy meeting and the forthcoming release of the US August Producer Price Index later today. The ECB is poised to increase interest rates on Thursday for the second occasion this year, propelled by escalating energy prices stemming from the persistent US-Iran conflict. Traders have fully priced in a 25 basis points move to 2.5%, as the latest data indicates that Eurozone inflation has risen back above 3% in August. “A September hike looks all but locked in,” stated Alessia Berardi. Inflation remains elevated and should stay sticky over the next few months before easing toward the second half of next year,” Berardi added.
Traders are set to scrutinise the US PPI inflation data on Thursday for further insights into the trajectory of US interest rates. The headline PPI is anticipated to demonstrate an increase of 5.3% year-over-year in August, compared to the previous figure of 4.7%. Meanwhile, the core PPI is anticipated to exhibit a rise of 4.6% in August, up from 4.2% in July. Any indications of rising inflation in the US may strengthen the US Dollar and pose challenges for the major pair in the short term. Strategists note that the Euro is treading water in early North American trade, with the EUR “entering Wednesday’s NA session unchanged vs. the USD following an overnight push to a fresh one week high.” They argue that “fundamentals remain supportive as ECB rate expectations firm in response to the latest rally in oil prices, reflecting the ECB’s greater sensitivity to energy price risks in the current environment.”
Looking ahead to this week’s policy decision, Scotiabank highlights that “a 25bpt rate hike is fully expected at Thursday’s meeting, and another 25bpts has been priced in for December.” The bank’s strategists “anticipate a hawkish hike tomorrow, as President Lagarde unveils the latest forecast and signals ongoing concern about upside risk,” reinforcing the market’s conviction in a continued tightening bias. In the daily chart, EUR/USD exhibits a mildly bullish near-term bias as the price hovers just above the Bollinger middle band, which corresponds to the 20-day simple moving average, while also maintaining a comfortable position above the 100-day SMA near 1.1560. This configuration indicates that dips are being supported within the recent consolidation envelope, with the Relative Strength Index (14) around 58 suggesting steady, albeit not extreme, upside momentum within the prevailing range.
On the topside, immediate resistance emerges at the Bollinger upper band around 1.1700, where prior attempts have tended to stall. A clear break above this ceiling would open the way for a more decisive extension of the recovery. On the downside, initial support is observed at the Bollinger middle band near 1.1625, followed by the 100-day SMA around 1.1560 and the lower Bollinger band close to 1.1555. This clustered zone is expected to function as a significant floor while the broader constructive tone remains intact.
