EUR/USD Price Forecast: Consolidates around 1.1640 in countdown to ECB’s policy decision

• The Euro remains sideways at around 1.1640 against the US Dollar ahead of the ECB’s interest rate announcement.
• The ECB is widely expected to tighten its monetary policy.
• Investors also await the US PPI data for August.

The Euro (EUR) trades in a tight range at around 1.1640 against the US Dollar (USD) during the European trading session on Thursday. The major currency pair consolidates as investors await the European Central Bank’s (ECB) monetary policy decision, which will be announced at 12:15 GMT.

In the policy meeting, the ECB is widely anticipated to hike its Deposit Facility Rate by 25 basis points (bps) to 2.5%. Firm ECB interest rate hike expectations underscore the monetary policy statement and President Christine Lagarde’s press conference as key triggers for the euro’s next move.

Analysts at Danske Bank expect the ECB to deliver another modest tightening step at its upcoming meeting, noting that “in the euro area, the ECB will announce its deposit rate” and that “we expect the ECB to raise policy rates by 25bp, bringing the deposit rate to 2.50%, in line with consensus and market pricing.” They anticipate that President Lagarde will “retain full optionality over the future rate path and provide no firm guidance,” stressing that they “do not expect Lagarde to rock the boat materially, but keeping all options open, which should limit the market reaction in our view.”

On the US Dollar front, investors await the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT. The US headline PPI is expected to come in higher at 5.3% Year-on-Year (YoY) from 4.7% in July. The core PPI – which excludes volatile food and energy items – rose by 4.6% YoY, stronger than the previous reading of 4.2%.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1637. The pair maintains a near-term bullish bias as price holds above the 20-day exponential moving average (EMA) at 1.1609, suggesting underlying demand remains intact. The Relative Strength Index (RSI) around 58 keeps a positive tilt without yet signaling overbought conditions, hinting that buyers still have some room to extend the advance while the short-term trend stays constructive.

On the downside, initial support is provided by the 20-day EMA at 1.1609, and a daily close below this level would ease the current bullish pressure and open the door to a deeper corrective pullback. As long as EUR/USD defends this moving average on closing bases, the broader technical structure favors further consolidation with an upside bias, with any dips likely to attract fresh buying interest rather than signaling a decisive trend reversal.

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