EUR/USD Under Pressure as Inflation Concerns Trump Eurozone Growth

The EUR/USD exchange rate has been trading around $1.1350 on September 30 after rebounding from the 1.1310-1.1320 area, but the bearish structure remains intact.

Despite a recent improvement in eurozone growth, with the regional economy expanding by 0.6% quarter-over-quarter and 1.2% year-over-year in the second quarter, inflation remains a concern for the European Central Bank (ECB).

The ECB has already raised rates by 25 basis points on September 10, taking the deposit rate to 2.50%, but policymakers have signaled that renewed inflation pressure, driven mainly by expensive energy and conflict in the Middle East, does not allow them to quickly bring the tightening cycle to an end.

Treasury yields continue to support the dollar, with the Federal Reserve's target range standing at 3.75-4.00%, and recent comments from policymakers suggest that the fight against inflation is not yet over.