EUR/USD Price Analysis – Sep 14, 2023

Daily Price Outlook

The EUR/USD currency pair continued to rise, reaching around 1.0750 in early European trading on Thursday. Despite positive US inflation data, traders are focusing on the European Central Bank (ECB) interest rate decision. Most expect the ECB to keep rates unchanged in September. However, recent market sentiment suggests a 65% chance of a rate hike, likely the last in a cycle that began in July 2022. Investors will listen closely to ECB President Lagarde's speech later in the day. If ECB officials sound more hawkish (favoring rate hikes), the Euro could gain strength against the US Dollar, benefiting the EUR/USD pair. Thereby, the news of a potential ECB rate hike has led to uncertainty in the EUR/USD pair. If the ECB hints at rate hikes, the Euro may strengthen against the US Dollar.

US Inflation in August Sparks Concerns and Rate Hike Speculation

According to data released on Wednesday, the United States experienced its highest monthly inflation increase in 14 months during August. The Consumer Price Index (CPI) surged by 0.6% compared to the previous month, surpassing expectations, and marked an annual increase of 3.7%. The core CPI, which excludes volatile food and energy prices, also rose by 0.3% on a monthly basis, with an annual increase of 4.3%. While market expectations lean toward the Federal Reserve (Fed) maintaining interest rates at the upcoming FOMC meeting, these figures signal the Fed should remain watchful for potential future spikes in inflation.

Hence, there is a 97% probability of no rate change in September, but a 49.2% chance of a rate hike in November, according to the CME Fedwatch Tool.

Upcoming Market Events: ECB Decision and US Data

Looking ahead, market watchers will pay close attention to the ECB's interest rate decision and ECB President Lagarde's press conference at 12:45 GMT. Besides this, Thursday will bring the release of US weekly Initial Jobless Claims, the Producer Price Index (PPI), and monthly Retail Sales. These important events could spark significant fluctuations in the market, providing traders with potential opportunities when dealing with the EUR/USD pair.

EUR/USD - Technical Analysis

The EUR/USD pair displays indications of continued downward movement. Current observations note a negative correlation in the stochastic oscillator, bolstering the likelihood of an extended bearish trend for the day, with a primary target set at 1.0635.

Our analysis maintains a bearish outlook for subsequent sessions only if it manages to break below 1.07207 level. For today, we project a trading range with support at 1.0660 and resistance at 1.0810.