EUR/USD declines to approximately 1.1460 during the early Asian session on Thursday. The Federal Reserve has elevated interest rates and indicated the likelihood of additional hikes in borrowing costs in the near future. The ECB has underscored its commitment to a data-dependent strategy, refraining from any pre-commitment regarding future actions on interest rates. The EUR/USD pair experiences a decline, settling at approximately 1.1460 during the Asian trading hours on Thursday. The Euro weakens against the US Dollar following an interest rate hike from the US Federal Reserve. The US Initial Jobless Claims data is set to be released later on Thursday. The US central bank raised the benchmark interest rate by 25 basis points to a 3.75%–4.00% range at its September policy meeting on Wednesday, as widely expected. This signifies the Federal Reserve’s inaugural increase in interest rates over the past three years.
Fed Chairman Kevin Warsh stated during the press conference that inflation has been “too high … for too long.” And “Today’s decisive hike-supported by all FOMC members and paired with an upgrade in the ‘dot plot’ summary of economic projections-should go a long way toward restoring confidence in the Fed’s commitment to fighting inflation, and help remove a major headwind keeping the dollar restrained,” said Karl Schamotta. Last week, the European Central Bank increased its key interest rates by 25 basis points. The central bank emphasised that it will not make any pre-commitments regarding future actions following its second rate increase since the onset of the Iran war. ECB President Christine Lagarde indicated that inflation within the Eurozone is expected to remain high for an extended period and recognised the divergence in interest rate expectations.
Strategists highlight that the ECB is already pushing back against the pace of market repricing. They note that in her press conference last week, President Lagarde “refused to reaffirm that markets ‘understand the ECB’s reaction function well,’” which Rabobank construes “as a hint that the market may be moving faster than the policymakers like.” At the same time, the bank stresses that, “even though energy-driven inflation is set to increase further, price pressures are still mostly driven by that supply shock and there is no evidence that inflation is spreading,” suggesting the ECB may be less inclined to validate the more aggressive tightening path implied by current market pricing. In the daily chart, EUR/USD maintains a bearish near-term bias as the spot price remains firmly below the 100-day moving average and the middle line of the Bollinger Bands (20).
Price remains constrained below the lower Bollinger Band, highlighting persistent downside pressure. Meanwhile, the Relative Strength Index (14) at approximately 31.9 lingers in oversold territory, indicating that despite the pair being stretched to the downside, selling interest continues to prevail as long as these overhead levels restrict recovery efforts. On the topside, initial resistance aligns with the lower Bollinger Band at 1.1485, followed by the 100-day MA at 1.1550, which reinforces the broader bearish structure. Above that, the Bollinger middle band at 1.1605 and the upper band near 1.1720 create a broader resistance corridor, where any significant corrective bounce is likely to falter unless buyers can reclaim and maintain levels beyond this cluster.
