EUR/USD Climbs as ECB Holds and Fed Rate Cut Odds Rise to 85%

The euro is receiving support from comments by senior ECB officials pointing to keeping borrowing costs unchanged for now. The Governor of the Croatian National Bank, Boris Vujčić, stated yesterday that the ECB should only return to easing if inflation falls below the target and fails to recover. Experts consider such a scenario possible next year, but for now consumer prices remain above 2.0% (in October, the headline rate was 2.1% and core inflation 2.4%). At the same time, the ECB’s Chief Economist Philip Lane noted concerns about accelerating inflation in the energy sector.

The U.S. dollar, in turn, is under pressure as markets grow more confident that the Fed could deliver another 25-basis-point rate cut at its December meeting. Several Fed officials this week expressed concerns about a weakening labor market and indicated that another adjustment may be appropriate. Meanwhile, September retail sales slowed to 0.2% from 0.6% versus a 0.4% forecast, signaling cooling economic activity. According to the CME Group FedWatch Tool, the probability of a December policy move has jumped from 30.0% to 85.0%.

Support and resistance levels

The instrument continues a downward correction toward the long-term uptrend. A break above 1.1658 (Murrey level [5/8]), above the upper Bollinger Band, would allow the pair to exit the descending channel and extend gains toward 1.1780 (Murrey level [5/8]) and 1.1841 (Murrey level [6/8]). The key level for bears is 1.1536 (Murrey level [1/8]) below the middle Bollinger Band; a firm break below would open the way for a decline toward 1.1415 (Murrey level [–1/8]) and 1.1353 (Murrey level [–2/8]).

Technical indicators are mixed: Bollinger Bands are pointing lower, the MACD remains stable in negative territory, while the Stochastic oscillator is moving higher but has reached the overbought zone.

Resistance levels: 1.1658, 1.1780, 1.1841.

Support levels: 1.1536, 1.1415, 1.1353.

Trading scenarios and EUR/USD outlook

Short positions can be considered below 1.1536 with targets at 1.1415 and 1.1353, and a stop-loss at 1.1620. Time horizon: 5–7 days.

Long positions can be considered above 1.1658 with targets at 1.1780 and 1.1841, and a stop-loss at 1.1565.