The EUR/USD currency pair struggled to extend its earlier gains on Wednesday, trading around 1.1640 as it attempted to break decisively above the 200-day Simple Moving Average (SMA) at 1.1633 [1]. Volatility increased following the US Treasury’s bond-buyback announcement, which pushed Treasury yields higher and helped the US Dollar trim its losses [1]. Market participants were cautious, avoiding aggressive bullish positions ahead of the European Central Bank’s (ECB) interest rate decision scheduled for Thursday [1].
Strategists at Scotiabank indicated that policy expectations remain supportive for the Euro, with a 25 basis point rate hike fully expected at the upcoming ECB meeting and another 25 basis points priced in for December [1]. They anticipate a 'hawkish hike' from President Lagarde, who is expected to unveil the latest forecast and signal ongoing concern about upside risk, which could underpin the recent recovery in EUR/USD [1]. The tone was described as 'neutral/bullish,' with the Euro’s recent bounce considered tentative but present, as the pair tests one-week highs in the mid-1.16s [1].
Technical indicators show a constructive bias for EUR/USD, with the pair holding above the 50-day and 100-day SMAs and marginally above the 200-day SMA [1]. The price has formed a sequence of higher highs and higher lows since recovering from below 1.1400 in late July and briefly climbing above 1.1700 on August 21 [1]. The daily Relative Strength Index (RSI) has steadied above the neutral 50 level and points higher near 58, indicating healthy but not excessive bullish momentum, while the MACD remains slightly below zero, suggesting that bearish pressure is easing [1].
Immediate resistance is seen at the 1.1700 horizontal barrier, with a stronger hurdle around 1.1800. On the downside, the 200-day SMA near 1.1633 provides immediate support, followed by the 100-day SMA at 1.1561 and the 50-day SMA at 1.1522. A deeper decline could expose the 1.1400 structural support level [1].
CONCLUSION
EUR/USD is consolidating near key technical levels as traders await the ECB’s rate decision, with expectations of a hawkish hike supporting the Euro’s recent recovery. Technical indicators suggest a constructive outlook, but a decisive break above the 200-day SMA is needed to confirm further gains.