EURUSD Remains Steady Ahead of ECB Decision

EURUSD remained steady early Thursday as traders held back in anticipation of the European Central Bank’s key policy decision later in the day.

The central bank is widely expected to lower rates by 25 basis points to 3.5%, following June’s rate cut of the same magnitude. With today’s rate cut almost certain, the market’s focus is shifting to the ECB’s future actions and the broader trajectory of its monetary policy.

Some market participants anticipate another 25 basis points cut in October, citing easing inflation near the 2% target and sluggish economic growth. However, others highlight persistent inflation risks that may necessitate a more cautious approach.

This aligns with the ECB’s stance of making decisions based on incoming data and evaluating each meeting individually.

In the near term, EURUSD has been trading sideways for the second consecutive day, hovering just above the key 1.10 support zone (psychological level / Fibo 38.2% retracement of 1.0666/1.1201).

The technical outlook appears weakening as the price has dipped below the 10-day and 20-day moving averages, with bearish momentum gaining strength. The long upper shadow on Wednesday’s candlestick indicates strong selling pressure.

If the ECB adopts a dovish tone, it could put additional pressure on the euro, potentially breaking below 1.10 and leading to a deeper pullback toward 1.0947/33 (55DMA / 50% retracement), while also testing the top of the rising daily cloud at 1.0893.

Conversely, a more hawkish stance from the ECB could provide a boost to the euro, with a rise above the daily Tenkan-sen (1.1078) potentially mitigating immediate downside risks.

Res: 1.1051; 1.1078; 1.1091; 1.1119
Sup: 1.1000; 1.0947; 1.0933; 1.0893