FX.co ★ EUR/USD

The Euro (EUR) is trading in a tight range near 1.1640 against the US Dollar (USD) as European market participants continue trading on Thursday. The major currency pair is still largely consolidating ahead of the European Central Bank (ECB) monetary policy release due Thursday at 12:15 GMT. In particular, the market widely expects the European Central Bank (ECB) to hike its Deposit Facility Rate by 25 basis points to 2.5%. In fact, expectations of an interest rate hike add another factor supporting the euro's narrative, adding weight to the importance of the monetary policy statement and post-decision press conference by President Christine Lagarde. Danske Bank analysts foresee another small rate hike by the ECB at its upcoming meeting. They stress that in the eurozone, the ECB will announce its decision on the deposit rate, and they expect it to raise interest rates by 25 basis points, bringing the deposit rate to 2.50%. This aligns with market expectations and the current consensus. Danske Bank foresees that Lagarde will remain completely flexible on the future path of interest rates, without offering specific guidance. They believe she will not surprise markets, but will instead stay flexible and leave all options open. As for the US dollar, market players are awaiting the publication of the US Producer Price Index (PPI) for August. The index will be released at 12:30 GMT. Analysts expect the US headline PPI to rise 5.3% from last year's 4.7%. US core PPI is forecast to rise 4.6% from last year's 4.2%.

On the daily chart, EUR/USD is currently quoted at 1.1637. The pair retains short-term bullish momentum, as price is above the 20-day exponential moving average (EMA) at 1.1609. Price above the EMA shows strong demand for the pair. The Relative Strength Index (RSI) is hovering at 58, maintaining a positive tone without suggesting the currency pair is overbought. However, the first downside support comes at the 20-day EMA level of 1.1609. Closing the price below this level daily will ease some of the existing bullish pressure and create room for a more noticeable corrective pullback. But as long as EUR/USD keeps defending this moving average on a closing basis, the overall technical outlook will favor further consolidation with an upside bias. Under these conditions, treat any potential drops as a buying opportunity, not necessarily the start of a trend reversal.