The EUR/USD pair is trading just above 1.1000, following a decline after the release of US Consumer Price Index (CPI) data for August. The CPI data suggests that the Federal Reserve (Fed) may take a more measured approach to interest rate cuts.
EUR/USD US Inflation Data
The US CPI rose by 2.5% on an annual basis in August, compared to 2.9% in July. Monthly CPI rose by 0.2% as expected. Core CPI also rose by 3.2% annually and 0.3% monthly. The US Dollar strengthened following the release, while EUR/USD fell.
Trump-Harris Debate
The EUR/USD pair gained earlier on Wednesday due to a broad-based weakening in the US Dollar (USD) following the Trump-Harris presidential debate. Most analysts believe Vice President Kamala Harris won the debate, and a recent poll shows her ahead of former President Donald Trump.
Fed Rate Cut Expectations
Investors continue to see a significant chance of the Fed cutting interest rates by 50 basis points (bps) at its next meeting. A double-dose 50 bps cut could weigh on the USD and be bullish for EUR/USD.
ECB Meeting
The European Central Bank (ECB) is scheduled to announce its monetary policy decision on Thursday. The consensus expectation is for a 25 bps cut to the deposit facility rate. However, the ECB’s updated macroeconomic projections could provide volatility.
EUR/USD Technical Analysis
EUR/USD has been in a downtrend since peaking at 1.1202 on August 26. The pair has broken below the previous swing low of 1.1017, confirming more downside. The next major support level is 1.1000. However, there is also a risk of a recovery, as the Relative Strength Index (RSI) has risen sharply.
