Euro Edges Higher on Softer Dollar, but Remains in Bearish Technical Position

The euro edged higher against the US dollar on Friday as a softer dollar provided short-term support. Despite this gain, the EUR/USD pair remains below its 100-day simple moving average and in a bearish technical position.

The Federal Reserve has increased its benchmark interest rate to a 3.75% to 4% range, while the European Central Bank (ECB) recently lifted its deposit rate to 2.50%. The ECB is expected to wait until December before implementing a final rate hike aimed at addressing inflation pressures linked to conflict in the Middle East.

Scotiabank strategists note that the latest euro area inflation figures have not materially altered the policy outlook, with headline inflation remaining in the low 3% area and core hovering in the mid-2% range. They point out that messaging from the ECB remains hawkish, a tone they see reflected in current market pricing.

The technical picture for EUR/USD is bearish, with the spot price trading under the 100-day simple moving average and beneath the middle line of the Bollinger Bands. Initial support lies at 1.1475, aligned with the lower Bollinger band, while initial resistance is defined by the 100-day moving average at 1.1550.