EUR/USD Outlook: Hovering Near Recent Lows Post-ECB Meeting

  • The dollar index soared to a six-month peak due to upbeat economic data.
  • The European Central Bank indicated it was likely concluding its interest rate hike cycle.
  • The US producer price index for final demand increased by 0.7% last month.

The euro hovered near fresh lows hit on Thursday after the ECB meeting, making today’s EUR/USD outlook bearish. Meanwhile, due to upbeat economic data, the dollar index soared to a six-month peak on Thursday. The European Central Bank (ECB) indicated it was likely concluding its interest rate hike cycle.

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The euro depreciated against the dollar following the ECB’s decision to raise its key interest rate to a record high of 4% on Thursday. Notably, the ECB signaled that this move was likely the last in its more than a year-long effort to combat inflation. 

In August, US retail sales witnessed a 0.6% surge, surpassing the expected 0.2% increase, primarily driven by higher gasoline prices. Simultaneously, weekly initial jobless claims rose to 220,000 but were below the forecast of 225,000. 

Moreover, elevated gasoline prices impacted the latest inflation data, with the producer price index for final demand increasing by 0.7% last month. This exceeded the 0.4% estimate.

Despite the robust US economic data, expectations for the Federal Reserve remained essentially unchanged. Markets expect the central bank to maintain its interest rates during the September 19-20 policy meeting. 

Furthermore, the expectations for a 25-bps rate hike in the November meeting decreased to 35.3%, down from 41% the previous day.

EUR/USD key events today

There are no big events on the calendar today for EUR/USD. Therefore, investors will keep absorbing data from the previous session and the ECB policy meeting outcome.

EUR/USD technical outlook: Bears shatter channel support.

EUR/USD 4-hour chart

On the charts, the EUR/USD price broke below the bullish channel support and the 1.0701 support level. This confirmed the continuation of the previous bearish trend. The price made a strong bearish swing, reaching a new low in the downtrend. Moreover, the move saw the price push far below the 30-SMA, with the RSI dropping to near oversold levels. 

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Currently, the move has paused at the 1.0650 support level. However, given the strong bearish bias, this might be a short pause. Bears will likely soon return to break 1.0650 and retest 1.0601.

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