EUR/USD was pressured near 1.1000 before the ECB decision

EUR/USD Current Price: 1.1020

• The US consumer price index disappointed those hoping for an aggressive Fed.
• The European Central Bank will announce a 25 basis point interest rate cut on Thursday.
• EUR/USD flirted with the 1.1000 mark, looking to break below it.

EUR/USD extended its weekly decline to 1.1001 on Wednesday, recovering slightly before the close. The pair heads into the Asian open trading around the 1.1020 level with an overall bearish stance.

Financial markets turned risk-averse after the release of the United States (US) consumer price index (CPI) as the numbers weakened the chances of a 50 basis point Federal Reserve (Fed) interest rate cut (bps) at the next meeting. week. The US Bureau of Labor Statistics reported that the CPI rose 2.5% on an annual basis in August, down from 2.9% in July, while the annual core figure was printed at 3.2% , unchanged from the previous month. In addition, the core monthly index rose 0.3%, worse than the 0.2% advance expected.

Speculative interest was hoping for further easing of price pressures and a more aggressive Fed. Stock markets fell as a result, with Wall Street posting sharp losses after the open. However, the three major indexes recovered before the close and pared most of their early losses. The US dollar, however, held on to a good chunk of its FX gains.

Investors will now focus on the European Central Bank (ECB). The ECB will announce its monetary policy decision early Thursday and is expected to cut its three main interest rates by 25 bps each. Policymakers will act not only because of reduced price pressures, but also because of growing concerns about a potential recession in the eurozone. Of course, officials won’t say it in words, but they will reiterate that they will remain vigilant and dependent on the data.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows that risk remains tilted to the downside. The pair has further extended its decline below a 20 simple moving average (SMA), while the 100 SMA is losing momentum a few pips above a flat 200 SMA, both well below the current level. Technical indicators, meanwhile, pared their slides but remain well in negative levels, far from suggesting downside exhaustion.

Technical readings on the 4-hour chart support another move south. The 20 SMA is gaining downward traction below a flat 100 SMA, while EUR/USD recovered modestly after testing the 200 SMA. Finally, the technical indicators have recovered from near oversold values, but remain below the median lines and have not directional power. A break through the 1.1000 level is likely to force buyers to give up and encourage sellers, with the pair then looking to retest the 1.0900 level.

Support levels: 1.0990 1.0950 1.0910

Resistance levels: 1.1050 1.1090 1.1140