The EUR/USD pair advanced on Thursday, climbing past 1.1750 during the US session after the European Central Bank (ECB) kept monetary policy unchanged and softer US economic data weighed on the Dollar.
The pair briefly dipped toward 1.1660 earlier in the day following the ECB’s updated forecasts, but regained traction as US Jobless Claims rose more than expected and the August CPI release came largely in line with market consensus. The inflation report tempered expectations of a more aggressive Federal Reserve stance, helping the Euro recover lost ground.
Technical Outlook
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On the daily chart, EUR/USD is trading just above 1.1700, holding slightly above the flat 20-day SMA around 1.1670. Longer-term averages remain well below, with the 100-day SMA losing upward momentum. Indicators have turned modestly lower but still sit within neutral territory, reflecting indecision.
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On the 4-hour chart, the pair trades beneath a mildly bearish 20-SMA, now acting as resistance near 1.1720. The price also flirted with the 100-SMA at 1.1670, while momentum indicators remain weak in negative territory, leaving risks tilted to the downside unless bulls secure a break higher.
Support levels: 1.1670 • 1.1630 • 1.1590
Resistance levels: 1.1720 • 1.1770 • 1.1825
ECB Projections Drag on Euro
While the ECB left rates unchanged, updated staff projections hinted at subdued inflation ahead. Policymakers now forecast headline inflation averaging 2.1% in 2025, easing further toward target in 2026 and 2027. Core inflation is also expected to slow, while growth is projected at 1.2% in 2025, slightly higher than June’s 0.9%, before moderating again in 2026.
These cautious estimates initially weighed on the Euro, pushing EUR/USD to fresh intraday lows.
US CPI Lifts Euro
In the US, August CPI rose 2.9% year-on-year, up from 2.7% in July, with core CPI steady at 3.1%. Monthly inflation accelerated to 0.4% from July’s 0.2%. Although the data met expectations, it failed to fuel bets on a larger Fed move. Instead, traders scaled back aggressive policy expectations, leaving the Dollar under pressure.
With markets now fully pricing in three Fed rate cuts by year-end 2025, the Euro found room to push back above the 1.1700 handle.
EUR/USD is holding firm above 1.1700 as softer US data offsets cautious ECB projections. A sustained move above 1.1770 could open the door for further gains, while a drop under 1.1670 would risk a deeper pullback.
