• Softer Euro-zone inflation figures led to the initial leg of Wednesday's intraday pullback.
  • The Fed delivered a hawkish cut, which boosted the USD and added to the selling bias.
  • Absent relevant market-moving economic data leaves the pair at the mercy of the USD.

The EUR/USD pair came under some renewed selling pressure on Wednesday and eroded a major part of the previous session's positive move, albeit remained well within a familiar trading range held over the past two weeks or so. The initial leg of the intraday pullback came after the release of final Euro-zone inflation figures, which showed that the headline CPI rose 0.1% in August as compared to 0.2% anticipated. On the other hand, the annual inflation rate was confirmed at 1.0% while core prices rose 0.9% and exerted some pressure on the shared currency.

Hawkish Fed cut exerted some pressure

Meanwhile, the downtick accelerated further after the Fed, as was widely expected, lowered policy rate by 25 bps for the second time but the language of the accompanying statement raised questions if there will be another rate cut this year. The so-called dot-plot showed that the median projections of federal funds rate would be at present levels through the end of 2020, suggesting that the Fed is already done with its mid-cycle adjustments and provided a goodish lift to the US Dollar. Moreover, there were several dissenting votes, James Bullard wanted to cut 50 bps cut while Esther L. George and Eric S. Rosengren preferred to stand pat, implying that further rate reductions were not guaranteed.
 
The pair dropped to an intraday low level of 1.1014 in reaction to the hawkish cut but managed to find some support at lower levels after the Fed Chair Jerome Powell's comments at the post-meeting press conference suggested that the central bank was open to another cut before the year-end. The pair finally settled around 15 pips off session lows and edged higher during the Asian session on Thursday. In absence of any major market-moving economic releases from the Euro-zone, the USD price dynamics might continue to act as an exclusive driver of the pair's momentum. Later during the early North-American session, the US economic docket - featuring the release of initial weekly jobless claims and Philly Fed Manufacturing Index - might contribute towards producing some short-term trading opportunities.

Short-term technical outlook

Given the pair's inability to capitalize on attempted bullish moves, the risk remains skewed to the downside, though bearish traders are likely to wait for a sustained weakness below the key 1.10 psychological mark. Below the mentioned handle, the pair seems more likely to resume its prior/well-established bearish trend and accelerate the slide back towards challenging 2019 swing lows support near the 1.0925 region. The downward trajectory might then turn the pair vulnerable to break through the 1.0900 handle and head towards testing its next major support near the 1.0840-35 region.
 
On the flip side, the pair needs to decisively move beyond a three-month-old descending trend-line resistance in order to increase prospects for any further near-term recovery. Convincing break through the mentioned barrier, currently around the 1.1080 region, now seems to set the stage for a more beyond the 1.1100 round-figure mark, and 1.1145 intermediate resistance, towards challenging 100-day SMA near the 1.1175-80 region en-route the 1.1200 handle.

fxsoriginal

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

Gold gives away some gains, slips back to $2,980

Gold gives away some gains, slips back to $2,980

Gold retraced from its earlier all-time highs above the key $3,000 mark on Friday, finding a footing around $2,980 per troy ounce. Profit-taking, rising US yields, and a shift to a risk-on environment seem to be putting the brakes on further gains for the metal.

Gold News
EUR/USD remains firm and near the 1.0900 barrier

EUR/USD remains firm and near the 1.0900 barrier

EUR/USD is finding its footing and trading comfortably in positive territory as the week wraps up, shaking off two consecutive daily pullbacks and setting its sights back on the pivotal 1.0900 mark—and beyond.

EUR/USD News
GBP/USD remains depressed, treads water in the low-1.2900s

GBP/USD remains depressed, treads water in the low-1.2900s

GBP/USD is holding steady in consolidation territory after Friday’s opening bell on Wall Street, hovering in the low-1.2900 range. This resilience comes despite disappointing UK data and persistent selling pressure on the USD.

GBP/USD News
Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Crypto Today: BNB, OKB, BGB tokens rally as BTC, Shiba Inu and Chainlink lead market rebound

Cryptocurrencies sector rose by 0.13% in early European trading on Friday, adding $352 million in aggregate valuation. With BNB, OKB and BGB attracting demand amid intense market volatility, the exchange-based native tokens sector added $1.9 billion.

Read more
Week ahead – Central banks in focus amid trade war turmoil

Week ahead – Central banks in focus amid trade war turmoil

Fed decides on policy amid recession fears. Yen traders lock gaze on BoJ for hike signals. SNB seen cutting interest rates by another 25bps. BoE to stand pat after February’s dovish cut.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025