Key Takeaways
- EUR/USD starts the week near 1.172 with last week’s range at roughly 1.161 to 1.176.
- Price is above the 20 day and 50 day averages and daily RSI is in the mid 60s, keeping a buy-the-dip bias alive.
- The 61.8 percent retracement of the July high to August low sits near 1.171 and is being tested. A daily close above 1.176 would target 1.183.
- Key catalysts are Thursday’s U.S. CPI at 08:30 ET and the ECB meeting and press conference later that day. The Fed meets on September 17 with markets leaning to a 25 bp cut.
- Supports: 1.166 to 1.165, then 1.162 and 1.158. Resistances: 1.173 to 1.176, then 1.177 to 1.179 and 1.183.
Market Dynamics and Recent Performance
EUR/USD begins the week near 1.172 after punching higher on the softer U.S. jobs print and a broad pullback in the dollar. Traders are focused on two big macro moments that land almost back to back this week. The ECB holds its policy meeting on Wednesday and Thursday, with the press conference on Thursday, and consensus looks for no change after June’s cut. A few hours earlier, the August U.S. CPI hits the tape at 08:30 ET, a release that will shape expectations into the Fed’s September 17 decision where markets lean toward a 25 bp cut. The dollar index has been choppy but broadly softer into these events, which has kept dips in the euro shallow.
On the tape, last week’s range stretched roughly 1.161 to 1.176 and Friday’s close came in around 1.172, leaving the pair near the weekly highs. That tone is consistent with a sentiment shift across FX where options markets have shown less demand for dollar upside protection compared with early summer.
Technical and Fundamental Influences
Price sits above the rising 20 day and 50 day moving averages, keeping the near term trend pointed higher. Daily momentum is constructive, with RSI sitting in the mid 60s.
The 61.8 percent retracement of the July high to the August low comes in near 1.171, and price is testing that zone now. Immediate resistance is layered around 1.173 to 1.176, then 1.177 to 1.179 and 1.183 on extension. First support is 1.166 to 1.165 at the short term averages, then 1.162 and 1.158 if a CPI surprise jolts the dollar higher. A close below 1.165 would warn that bulls are losing control, while a daily close above 1.176 would open 1.183 next.
On the fundamental side, the pivot is simple. If Thursday’s CPI is close to or cooler than the 0.3 percent month over month consensus, rate cut odds should stay firm and the dollar’s bounce attempts likely fade. A hotter print would lift yields and curb euro upside into the ECB press conference. The ECB is expected to hold at 2 percent as it updates staff projections, and any hint that growth is holding up with inflation sticky would cap rallies above 1.18. Conversely, a cautious tone from President Lagarde that leans toward easier policy later would help EUR/USD extend. Options pricing points to contained but event sensitive vol this week.
Looking Forward
Base case is a bullish consolidation above 1.165 with topside tests into 1.176 to 1.183 if CPI does not re-ignite dollar strength. A clean break and daily close above 1.176 would put 1.183 on the radar, followed by 1.190 if momentum expands. A hot CPI would likely press EUR/USD back toward 1.162 first, with 1.158 as a deeper line in the sand. Barring an upside inflation shock, dips into the 1.165 to 1.162 region should attract buyers ahead of the ECB.
