EUR/USD Analysis: ECB Cuts Rates, USD Demand Surges
- European Central Bank reduces benchmark rate by 25 basis points.
- US Producer Price Index lower than expected in August.
- EUR/USD sees modest bounce, but technical indicators point to possible bearish trend.
The EUR/USD pair hovered around 1.1000 before the European Central Bank (ECB) announcement. The US inflation data had a mixed impact on the markets, leading to a rise in USD demand initially. However, sentiment improved later in the day, supported by a tech sector rally and positive performance in Asian and European markets.
The ECB decision was more dovish than expected, with a 25 basis point cut in the benchmark rate. Despite mixed statements about economic conditions, the Euro showed minimal reaction to the news.
Following the ECB announcement, the US released the August Producer Price Index, which was slightly below expectations. This was accompanied by Initial Jobless Claims meeting forecasts.
EUR/USD Technical Analysis
On the daily chart, EUR/USD is at risk of a bearish trend, with indicators pointing downwards. The 4-hour chart also suggests a potential breakdown, with support levels at 1.0990, 1.0950, and 1.0910, and resistance levels at 1.1050, 1.1090, and 1.1140.