The EUR/USD pair edged higher to around 1.1655 during the early Asian session on Thursday, supported by a hawkish stance from the European Central Bank (ECB) [1]. The ECB is anticipated to raise key interest rates in September, following a tightening move in June aimed at containing price pressures amid ongoing geopolitical tensions [1]. Markets are currently pricing in nearly a 25% probability of the ECB deposit rate reaching 3.0% by March 2027 and about a 60% chance by September, according to Reuters [1].
ECB Executive Board member Isabel Schnabel stated on Wednesday that borrowing costs will need to rise further, citing upside risks to inflation from the prolonged Middle East conflict and a surprisingly strong euro-zone economy [1]. Strategists at Scotiabank noted that ECB policy expectations remain firmly skewed toward further tightening, with markets pricing in 24 basis points of tightening for the September 10th meeting and a cumulative 40 basis points by year end [1]. This persistent hawkish stance continues to underpin Euro sentiment, even as the currency’s recent rally shows signs of consolidation [1].
On the US side, the Federal Reserve’s preferred inflation gauge, the core Personal Consumption Expenditures (PCE) Price Index, held steady at 3.3% year-over-year in July, while the headline PCE Price Index remained unchanged at 3.7% year-over-year, slightly above the consensus of 3.6% [1]. Both the PCE Price Index and the core PCE Price Index rose by 0.2% on a monthly basis in July [1]. Market participants are closely watching the upcoming Jackson Hole Symposium, with speeches from Fed officials, including Chairman Kevin Warsh, expected to provide further direction [1].
From a technical perspective, EUR/USD maintains a constructive outlook above the 100-day simple moving average (SMA) and the Bollinger Bands’ 20-period SMA, with the Relative Strength Index (RSI) at 65.8 indicating firm but stretched upside momentum [1]. Immediate support is seen around 1.1585–1.1575, while resistance is near the Bollinger upper band at 1.1715 [1].
CONCLUSION
The Euro remains supported above 1.1650 as the ECB’s hawkish policy outlook continues to drive sentiment. With markets anticipating further tightening and key inflation data in focus, traders are looking to the Jackson Hole Symposium for additional cues. Technical indicators suggest the EUR/USD pair retains a bullish bias, though momentum may be stretched.