Euro trades muted ahead of expected ECB rate hike

• EUR/USD sees little change as traders remain cautious ahead of the ECB's widely expected 25-basis-point rate hike.
• Markets are focused on ECB President Christine Lagarde's comments for guidance.
• The US Dollar finds support after US CPI held at 4.2% YoY in May, limiting gains in the shared currency.

The EUR/USD pair trades near the 1.1550 region on Thursday as the Euro (EUR) remains little changed despite expectations that the European Central Bank (ECB) will raise interest rates at its upcoming policy meeting. Investors remain cautious ahead of the decision, focusing on policymakers' guidance regarding the future path of monetary policy.

Markets widely expect the ECB to deliver a 25-basis-point rate hike as officials continue their efforts to bring inflation back toward target. However, uncertainty over the pace of future tightening and concerns about the Eurozone's economic outlook have limited demand for the shared currency ahead of the announcement.

Meanwhile, the US Dollar (USD) finds support after the latest US inflation data showed headline Consumer Price Index (CPI) inflation remained at 4.2% YoY in May. Core CPI rose to 2.9% YoY, and investors remain cautious about declaring victory over inflation as the Iran war energy shock continues to remain a risk.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1550, holding a capped tone as it sits below the 100-period Simple Moving Average (SMA) at 1.1609 and clings to nearby support. The pair is trading over the 20-period SMA at 1.1540, but the cluster of horizontal resistances at 1.1559 and 1.1573 keeps the upside contained, reinforcing a corrective rather than impulsive recovery. The Relative Strength Index (RSI) around 46 hints at modest, non-committal momentum, consistent with a market consolidating under a heavier medium-term cap.

On the topside, initial resistance is located at 1.1559, followed by 1.1573, with the 100-period SMA at 1.1609 acting as the more significant barrier that bulls would need to reclaim to ease the bearish pressure. On the downside, immediate support is seen at 1.1549, reinforced by the nearby 20-period SMA at 1.1540, with a break exposing the next horizontal floor at 1.1535; a sustained move below these levels would open the door to a deeper pullback in the near term.

(The technical analysis of this story was written with the help of an AI tool.)