EUR/USD Price Analysis – Sep 11, 2023

Daily Price Outlook

During the early European session on Monday, the EUR/USD currency pair is experiencing an uptick, hovering around 1.0730. This upward movement can be attributed to a weakening US Dollar (USD). The US Dollar Index (DXY) is currently declining, standing at approximately 104.60, despite robust performance in US Treasury yields.

Although, the US dollar is expected to maintain its strength, thanks to previously released US economic data. Market participants are awaiting the release of August's US Consumer Price Index (CPI) data scheduled for Wednesday, as it holds the potential to provide useful insights into inflation trends, which in turn can influence trading decisions involving the EUR/USD pair.

Impact of US Economic Policies on EUR/USD Currency Pair

It's worth noting that US Treasury Secretary Janet Yellen expressed confidence in the US's ability to manage inflation without harming jobs. She also mentioned that inflation is going down. This is why, Investors are expecting the Fed to raise interest rates by 25 basis points in either November or December. This could limit the EUR/USD currency pair's potential to go up.

Moreover, Fed Governor Christopher Waller mentioned that they can make changes to interest rates based on how the economy is doing. On a related note, Fed Boston President Susan Collins has cautioned against being too strict with monetary policy and advocates for a careful approach. Meanwhile, Chicago Fed President Austan Goolsbee recently talked about the Fed's goal of reaching a "golden path" where inflation decreases without causing a recession.

Thus, the potential interest rate hikes in the US could limit the upward potential of the EUR/USD currency pair by underpinning the US dollar.

ECB's Rate Expectations and China's CPI Impact on EUR/USD Sentiment

Across the ocean, the European Central Bank (ECB) is expected to keep interest rates steady in their upcoming Thursday meeting. According to recent figures from Germany, consumer prices in August closely matched expectations, with a 6.4% increase compared to the previous year. The core price index also held steady, showing a 6.1% rise.

Another factor impacting the Euro's performance was China's recent release of their Consumer Price Index (CPI) for August. The report revealed a modest 0.1% increase in prices compared to the previous year, falling short of the anticipated 0.2% rise. However, it's worth noting that this is an improvement from the previous month when prices actually dropped by -0.3%.

Traders are closely watching China's economic situation, looking for clues about the challenges that Chinese authorities are dealing with. The market anticipates that Beijing will introduce more monetary and fiscal measures to help achieve their goal of reaching a 5% GDP growth rate for the current year.

EUR/USD - Technical Analysis

The EUR/USD pair has initiated today with an upward trajectory, distancing itself from the 1.0700 threshold. Current indications from the stochastic oscillator suggest a positive convergence, leading us to anticipate potential gains in the forthcoming sessions. The immediate target is set at 1.0785; a breach of this level could further propel the pair towards the 1.0880 region in the short term.

It's pivotal to mention that if the pair struggles to surpass 1.0785, it may revert to its primary bearish course. Conversely, a descent below the 1.0700 mark would nullify our projected bullish outlook, inducing a decline. For today's trading, we forecast the EUR/USD to oscillate between a support level of 1.0650 and a resistance at 1.0810.