Current trend

The EUR/USD pair is recovering from the “bearish” dynamics that resulted in the local lows of September 3 being updated: currently, the quotes are testing the 1.1045 mark for a breakout.

Tomorrow at 14:15 (GMT 2), the European Central Bank (ECB) will publish its interest rate decision: most experts are confident in the key value being adjusted from 4.25% to 4.00%, and deposit rates from 3.75% to 3.50%, as data published in the Eurozone indicated a slowdown in inflation to the target of 2.0%. So, in Germany, the consumer price index (CPI) fell from 2.3% to 1.9%, in Spain – from 2.8% to 2.2%, and in France – from 2.3% to 1.9%, confirming the effect of the monetary policy being pursued. The adjustment in borrowing costs is already fully priced in, as there appears to be consensus on the issue among the regulator's governing council.

Meanwhile, former ECB President Mario Draghi presented a report on EU competitiveness for the 2024–2029 period. According to his estimates, regional authorities need to allocate 750.0 period 800.0 billion euros per year (about 4.4 period 4.7% of gross domestic product (GDP)) to transform the economy. The official emphasizes that the growth of macroeconomic indicators in the Eurozone over the past two decades has been slower than in the United States, which is explained, in particular, by insufficient achievements in the field of labor productivity. Draghi believes that Germany's industrial sector had the most negative impact on the dynamics, as it continues to struggle with high energy prices and a loss of competitiveness in favor of China, and the country's GDP has only slightly recovered after the COVID-19 pandemic. In addition, on Monday, investors paid attention to the dynamics of the Sentix investor index, which records the level of confidence in the economic prospects of the region: the indicator fell from ˗13.9 points to ˗15.4 points.

Today at 14:30 (GMT 2), the market will receive statistics on the US consumer price index, which is likely to slow down from 2.9% to 2.6% YoY and will add another 0.2% MoM. The core indicator is expected to remain unchanged at 3.2% and 0.2%, respectively. On Thursday, data on production inflation will be presented: in August, the indicator is expected to decrease from 2.2% to 1.8%, while the core index excluding food and energy products may adjust from 2.4% to 2.5%.

Support and resistance

On the D1 chart, quotes are correcting, again approaching the resistance line of the ascending channel with dynamic boundaries of 1.1000–1.0750.

Technical indicators have begun to weaken the buy signal: fast EMAs on the Alligator indicator are again approaching the signal line, narrowing the range of fluctuations, and the AO histogram is forming new downward bars, falling in the buy zone.

Support levels: 1.1015, 1.0940.

Resistance levels: 1.1065, 1.1140.

Trading tips

Short positions can be opened after the price consolidates below the support level of 1.1015 with a target of 1.0940. Stop loss – 1.1060. Implementation period: 7 days or more.

In case of a reversal and continued growth of the asset, as well as consolidation above the resistance level of 1.1065, long positions with a target of 1.1140 will become relevant. Stop loss – 1.1020.