EUR/USD Awaits Catalyst from ECB Decision and US Inflation Data
The EUR/USD exchange rate has been stuck in a tight range, but Thursday's ECB decision and US inflation data could provide the catalyst needed to break it.
The pair remains driven by front-end interest rates, with the European Central Bank (ECB) September hike fully priced in, and another move heavily favored by December. In contrast, while policy rates in the United States remain far higher than in Europe, the expected path of tightening from the Federal Reserve is far less steep.
The US inflation data, specifically the Consumer Price Index (CPI) and Producer Price Index (PPI), may determine the fate of a September rate hike. If we get a hot reading, say north of 0.3% for CPI, there's a strong probability markets will swing heavily in favor of a rate increase.
The moving averages continue to contain EUR/USD, with the key levels to watch being the 200-day moving average and 23.6% Fib retracement of the October 2025 to January 2026 bull move clustered on the top side, and the 100-day moving average on the downside.