The EUR/USD pair edges higher to around 1.1655 during the early Asian session on Thursday. A hawkish stance of the European Central Bank (ECB) provides some support to the Euro (EUR) against the US Dollar (USD). Traders will closely monitor the Jackson Hole Symposium event later on Friday for fresh impetus.
The ECB is anticipated to raise the key interest rates in September, after tightening in June to contain price pressures amid ongoing geopolitical tensions. Markets are now pricing in nearly a 25% odds of the ECB deposit rate reaching 3.0% by March 2027 and about a 60% chance by September, according to Reuters.
ECB Executive Board member Isabel Schnabel said on Wednesday that borrowing costs will need to rise further as the lengthy conflict in the Middle East and surprisingly strong euro-zone economy pose upside risks to inflation.
Across the pond, the Feds preferred inflation gauge came in line with expectations, with the core Personal Consumption Expenditures (PCE) Price Index inflation held steady at 3.3% YoY in July, the US Bureau of Economic Analysis (BEA) showed on Wednesday.
Additionally, the headline PCE Price Index remained unchanged at 3.7% YoY in July, above the consensus of 3.6%. On a monthly basis, the PCE Price Index and the core PCE Price Index both rose by 0.2% in July.
Traders will take more cues from the speeches of Fed officials this week at Jackson Hole, Wyoming, for their annual symposium. Fed Chairman Kevin Warshs speech will be in the spotlight.
Euro rate path stays firmly hawkish as markets eye further ECB tightening
Strategists at Scotiabank highlight that ECB policy expectations remain firmly skewed toward further tightening, with markets still “pricing 24bpts of tightening for the September 10th meeting and a cumulative 40bpts by year end.” They note that this persistent hawkish stance continues to underpin Euro sentiment, even as the currencys recent rally shows signs of consolidation.
Technical Analysis: EUR/USD maintains a constructive outlook above the 100-day SMA
In the daily chart, EUR/USD extends its recovery above both the 100-day simple moving average (SMA) and the Bollinger Bands 20-period SMA, which now underpin a constructive bullish bias. Price is pressing the upper half of the Bollinger envelope, with the upper band acting as nearby overhead supply, while the Relative Strength Index (14) at 65.8 leans toward overbought territory, hinting that upside momentum is firm but increasingly stretched.
On the downside, initial support is clustered around the 20-period SMA at 1.1585, reinforced by the 100-day SMA at 1.1575 just below, before the lower Bollinger band at 1.1462 emerges as a deeper demand zone if a broader correction unfolds. On the topside, immediate resistance is located at the Bollinger upper band near 1.1715, and a sustained break above this barrier would open the way for a continuation of the current bullish phase, while failure to clear it could trigger consolidation back toward the moving-average supports.