Current trend

During the Asian session, the EUR/USD pair is recovering after a corrective decline yesterday, as a result of which the euro failed to consolidate at the local highs of September 5.

Trading volumes are currently extremely low ahead of today’s European Central Bank (ECB) monetary policy meeting. According to preliminary estimates, for the first time since June 2022, the interest rate may remain at 4.25%, the margin lending rate at 4.50%, and the deposit funds rate – at 3.75%. However, reports on consumer prices, which showed an increase in August in almost all the leading countries in the region, may change the regulator’s decision towards “hawkish” rhetoric.

Yesterday, the International Monetary Fund (IMF) released renewed forecasts for the German economy: the gross domestic product (GDP) of Europe’s largest economy is expected to contract by 0.3% at the end of 2023, while previous estimates suggested an increase of 0.4%, while experts predict an increase of 1.3% already in 2024. EU industrial production data released Wednesday fell 1.1%, after rising 0.4% last month versus expectations of –0.7%. YoY, the figure adjusted by –2.2% after –1.1% in June, although experts expected a decrease of 0.3%.

The American currency remained at 104.500 on the USD Index. The consumer price index in August increased by 0.6%, which accelerated growth from 3.2% to 3.7% YoY but the poor market reaction to the positive dynamics of the indicators may be associated with the core inflation, which, despite the August growth of 0.3%, decreased from 4.7% to 4.3% YoY, against which analysts believe that the US Federal Reserve has no reason to increase borrowing costs.

Support and resistance

On the daily chart, the trading instrument is correcting, consolidated below the support line of the global ascending corridor with dynamic boundaries of 1.1300–1.0800.

Technical indicators maintain a stable sell signal: fast EMA on the Alligator indicator are below the signal line, expanding the range of fluctuations, and the AO histogram forms corrective bars in the sell zone.

Resistance levels: 1.0830, 1.0960.

Support levels: 1.0680, 1.0530.

Trading tips

Short positions may be opened after the price declines and consolidates below 1.0680 with the target at 1.0530. Stop loss – 1.0750. Implementation period: 7 days or more.

Long positions may be opened after the price rises and consolidates above 1.0830 with the target at 1.0960. Stop loss – 1.0760.