The US Dollar (USD) strengthened on Thursday, pushing the USD Index (DXY) above 104.00, supported by rising US yields. Meanwhile, EUR/USD retreated to 1.0900 after the ECB’s decision to keep rates unchanged and President Lagarde’s projections for inflation hitting target in H2 2025.
President Lagarde highlighted the resilience of the labor market and projected a decline in HICP to the ECB’s target by 2025. Investors are debating potential Fed rate cuts, with the CME Group’s FedWatch Tool showing a 98% probability of lower rates in September and December.
Chicago Fed President Goolsbee suggested the US economy may return to a 2% inflation target, indicating a possible rate cut. The Eurozone’s economic recovery and cooling US indicators may support EUR/USD in the near term, alongside expectations of Fed cuts.
Looking ahead, Fedspeak will drive price action as the week concludes.
EUR/USD Technical Outlook
EUR/USD faces resistance at 1.0948 and 1.0981, with support at 1.0810 and 1.0666. A break above the 200-day SMA could signal further gains. The 4-hour chart shows some loss of upside momentum, with initial resistance at 1.0948 and support at 1.0872.
Analysis: The ECB’s decision and Lagarde’s comments have influenced the USD Index and EUR/USD, impacting global markets. Investors are watching for potential Fed rate cuts, which could further affect currency pairs. Understanding these factors can help individuals make informed decisions about their investments and finances.