The EUR/USD currency pair is trading lower by 0.1% at approximately 1.1610 during the European session on Tuesday, reflecting a modest strengthening of the US Dollar after a weak start to the day [1]. The US Dollar Index (DXY) is up 0.1% at around 99.00, indicating a slight improvement in sentiment toward the Greenback, supported by stronger US Nonfarm Payrolls (NFP) data for August and positive commentary from Federal Reserve members regarding inflation [1]. However, financial markets expect the US Dollar to remain rangebound, with both upside and downside limited ahead of key economic releases [1].
Technical analysis shows EUR/USD trading at 1.1612, maintaining a neutral near-term bias as it remains close to the 20-period exponential moving average (EMA) at 1.1601. The Relative Strength Index (RSI) stands at 54, suggesting momentum is neutral-to-positive and buyers retain a slight edge [1]. Initial support is identified at the 20-period EMA near 1.1600, with potential for dip-buying if the pair pulls back. If EUR/USD fails to hold this level, it could slide to the psychological support at 1.1500, while resistance is seen at the August high of 1.1710 [1].
Market participants are closely watching upcoming events that could drive volatility. The US Consumer Price Index (CPI) data for August, scheduled for release on Friday, is expected to provide a decisive move for the US Dollar [1]. Meanwhile, the Euro is also expected to remain in a limited range as investors await the European Central Bank’s (ECB) interest rate decision on Thursday. ABN Amro notes that "the path for the ECB is clear, and a rate hike at Thursday’s Governing Council meeting is fully priced by financial markets" [1]. The consensus for the ECB main refinancing operations rate is 2.65%, up from the previous 2.4% [1].
The ECB’s main refinancing operations rate, which is set at eight scheduled annual meetings, is a key determinant of Euro strength. An increase in this rate is typically bullish for the Euro as it attracts foreign capital inflows, while a decrease tends to weaken the currency [1]. The next ECB rate announcement is scheduled for Thursday, September 10, 2026, at 12:15 [1].
CONCLUSION
EUR/USD is consolidating near its 20-day EMA as traders await pivotal economic releases from both the US and Eurozone. The upcoming ECB rate decision and US CPI data are expected to drive market direction, with a rate hike by the ECB already priced in. Overall, sentiment remains neutral-to-positive, but volatility could increase following these events.