The EUR/USD currency pair has consolidated around the 1.0930 mark during Friday’s New York session, trading sideways as the U.S. Dollar (USD) remained stable despite the release of unexpected U.S. Producer Price Index (PPI) data. The U.S. Dollar Index (DXY), which measures the value of the dollar against six major currencies, hovered near 103.00.
The PPI report revealed that annual headline inflation slowed less than anticipated, decreasing to 1.8% from 1.9% in August—upwardly revised from an initial estimate of 1.7%. Economists had predicted a decline to 1.6%. Additionally, the core PPI, which excludes volatile food and energy prices, increased by 2.8%, surpassing forecasts of 2.7% and the previous figure of 2.6%, which was also revised upwards from 2.4%. The monthly headline PPI remained flat, while the core PPI grew by the expected 0.2%.
The unexpected acceleration in U.S. producer inflation has reignited concerns about persistent inflation. However, market expectations for a 25 basis point interest rate cut by the Federal Reserve (Fed) in November remain largely unchanged, according to the CME FedWatch tool. In contrast, Atlanta Fed President Raphael Bostic hinted that maintaining interest rates at the current range of 4.75%-5.00% is also a possibility. In an interview with the Wall Street Journal, Bostic stated, “This choppiness to me is along the lines of maybe we should take a pause in November, and I’m definitely open to that.” His comments followed the release of a U.S. Consumer Price Index (CPI) report showing inflationary pressures increased more than expected in September.
In other economic developments, the preliminary Michigan Consumer Sentiment Index for October unexpectedly dropped to 68.9, falling short of estimates of 70.8 and the previous reading of 70.1.
Daily Market Digest: EUR/USD Stabilizes While Euro Strengthens Against Peers
The EUR/USD pair trades near 1.0950 during North American trading hours, with the Euro demonstrating relative strength against other major currencies, despite market expectations for further interest rate cuts from the European Central Bank (ECB) in the upcoming monetary policy meetings this year. The ECB has already reduced its Deposit Facility Rate by 50 basis points to 3.5% and is expected to implement two additional 25 basis point cuts, with one anticipated next week and another in December.
Dovish sentiments regarding the ECB have intensified due to a faster-than-expected decline in inflationary pressures in the Eurozone and growing concerns about economic growth. ECB policymaker and Governor of the Greek Central Bank Yannis Stournaras noted that price pressures are decreasing quicker than anticipated in September and expressed support for two more rate cuts in the remaining meetings of the year, along with further reductions in 2025. Additionally, revised estimates for Germany’s Harmonized Index of Consumer Prices (HICP) for September indicated that inflation remains below the ECB’s target at 1.8%, according to flash estimates. The economic outlook for the Eurozone appears vulnerable, particularly as Germany is projected to end the year with a 0.2% decline in output, according to the German economic ministry.
Technical Analysis: EUR/USD Finds Support at 1.0900
The EUR/USD pair finds temporary support near the 200-day Exponential Moving Average (EMA) around 1.0900. The near-term outlook appears uncertain as the 20- and 50-day EMAs approach a bearish crossover near 1.1020.
The pair has weakened following the breakdown of a Double Top chart pattern on the daily timeframe, triggered after falling below the September 11 low of 1.1000. The 14-day Relative Strength Index (RSI) remains in the bearish range of 20.00-40.00, suggesting further weakness could be on the horizon.
If the pair decisively breaks below the 200-day EMA around 1.0900, it may find support near the significant round number of 1.0800. On the upside, resistance levels are likely to emerge at the September 11 low of 1.1000 and the 20-day EMA at 1.1090.
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