Current trend

During the Asian session, the EUR/USD pair shows confident growth, testing 1.1165 for a breakout.

This week, investors focused on macroeconomic statistics from the eurozone: the Consumer Price Index in August added another 2.2% year-on-year, reaching its lowest since July 2021, and slowed down slightly from 0.2% to 0.1% month-on-month, while the Core CPI rose by 2.8% and 0.3%, respectively, confirming ongoing pressure and staying above the European Central Bank's (ECB) target of 2.0%, despite the positive trend in recent months. The lowest annual rates were recorded in Lithuania (0.8%), Latvia (0.9%) and Ireland, Slovenia and Finland (1.1%), while the highest ones were recorded in Romania (5.3%) and Belgium (4.3%). Services traditionally became the driver of inflation, increasing in price by 1.88 percentage points (from 5.2% to 5.6%), followed by food, energy and tobacco, which added 0.46 percentage points. The ECB had previously forecast that inflation would rise again in the second half of the year, as previous sharp fluctuations in energy prices would no longer be factored into the annual figures, after which the movement towards the target of 2.0%, expected to be reached in the second half of 2025, would continue: in 2024, the value is expected to be 2.5%, in 2025 – 2.2%, and in 2026 – 1.9%. The bank's next meeting is scheduled for October 17, and market participants are now counting on at least one more reduction in borrowing costs by the end of the year.

Last Wednesday, the US Federal Reserve cut its interest rate to 5.00% from a 23-year high of 5.25%-5.50%, noting in the follow-up statement that the regulator had gained greater confidence that inflation was moving steadily toward 2.0%. At the same time, monetary authorities still expect some deterioration in the situation on the labor market: in particular, the forecast for the Unemployment Rate in 2024 was revised from 4.0% to 4.4%, and in 2025 — from 4.2% to 4.4%. However, the median forecast of the Federal Open Market Committee (FOMC) members suggests that the interest rate could fall to 4.38% by the end of this year and to 3.38% by the end of 2025.

On Monday, investors will focus on business activity statistics in the eurozone and the US: if the indicators in the manufacturing sector rise from 45.8 points and from 47.9 points, and in the services sector — from 52.9 points and from 55.7 points, this will support the quotes of national currencies and confirm the recovery of business after a long period of tightening monetary policy.

Support and resistance

On the daily chart, the instrument is again approaching the resistance line of the ascending channel with dynamic boundaries of 1.1350–1.0970.

Technical indicators have begun to strengthen the buy signal: fast EMAs on the Alligator indicator are moving away from the signal line, widening the fluctuation range, and the AO histogram is forming new upward bars, rising in the buy zone.

Support levels: 1.1130, 1.1000.

Resistance levels: 1.1200, 1.1330.

Trading tips

Long positions can be opened when the price consolidates above the resistance level of 1.1200 with the target of 1.1330. Stop-loss — 1.1140. Implementation time: 7 days and more.

Short positions can be opened after the price consolidates below the support level of 1.1130 with the target of 1.1000. Stop-loss — 1.1200.