The Euro experienced subdued performance against major currencies, with the EUR/USD pair holding steady near 1.1520 during early European trading hours on Thursday, remaining below the 100-day simple moving average (SMA) and maintaining a bearish near-term bias [1]. This comes as US inflation cooled for the second consecutive month, with the Consumer Price Index (CPI) rising 3.4% year-over-year in July, down from 3.5% previously, and the core CPI increasing 2.5% year-over-year, compared to 2.6% prior; both figures were in line with expectations [1]. As a result, traders further reduced the probability of a September Federal Reserve rate hike to 40%, according to the CME FedWatch tool [1]. The US Producer Price Index (PPI) report for July is also anticipated later on Thursday [1].
Geopolitical tensions in the Middle East, particularly between the US and Iran regarding efforts to end the war in the Gulf, have contributed to a risk-averse environment, potentially supporting the US Dollar as a safe-haven asset and creating headwinds for the Euro [1]. Analysts at Scotiabank noted that the Euro has been consolidating within a tight range since the FOMC meeting in late July, lacking a clear directional catalyst [1]. Technical analysis indicates that immediate resistance for EUR/USD is at the 100-day SMA of 1.1565, with support at the 1.1500 psychological level and further downside targets at 1.1475 and 1.13375 if bearish momentum persists [1].
Meanwhile, the EUR/JPY cross extended its losses for the third consecutive day, trading around 183.60 during Asian hours on Thursday and holding below the 50-day Exponential Moving Average (EMA), which reinforces a mildly bearish near-term bias [2]. The 14-day Relative Strength Index (RSI) at 47.11 suggests a neutral-to-soft momentum backdrop [2]. Immediate support is at the nine-day EMA of 183.49, with a decisive break below this level potentially pushing the pair toward its eight-month low of 179.37, recorded on August 3, and further to the nine-month low of 175.70 if downward momentum continues [2]. On the upside, resistance is at the 50-day EMA near 184.51, with a break above this level opening the path to retest the all-time peak of 187.95 set on April 17 [2].
A currency heat map showed that the Euro was the weakest against the Japanese Yen among major currencies on the day [2]. Scotiabank analysts also highlighted increasing local media attention on potential tensions between US officials and Japan’s government as the US pushes for Bank of Japan tightening, though there were no official comments from Japanese financial authorities at the time [2].
CONCLUSION
The Euro remains under pressure against both the US Dollar and Japanese Yen, weighed down by cooling US inflation, reduced Fed rate hike expectations, and ongoing geopolitical tensions. Technical indicators for both EUR/USD and EUR/JPY suggest a bearish or neutral-to-soft momentum in the near term. Market participants are likely to remain cautious ahead of further US economic data and developments in global geopolitics.