Loss of Trendline Support Risks Faster Downside Acceleration

Forex

Economic

Summary:

This setup keeps open the potential for another attempt to break below the ascending trendline; should a breakdown occur, downward momentum could accelerate toward the local support level around 1.1514.

SELL EURUSD

EXP

PENDING

1.16390

Entry Price

1.15140

1.16700

1.16058 -0.00031 -0.03%

Pips

PENDING

1.15140

Exit Price

1.16390

Entry Price

1.16700

The European Central Bank (ECB) raised its three key interest rates by 25 basis points, marking its second hike of the year and lifting the deposit facility rate to 2.50%. Policy makers justified the move by pointing out that ongoing conflict in the Middle East keeps fueling inflationary pressures, raising the risk that inflation will stay above its 2% target for longer than initially expected.

The ECB’s latest macroeconomic projections reflect this reality. The central bank expects headline inflation to average 3.0% in 2026, slow down to 2.5% in 2027, and gradually converge toward 2.1% in 2028. Although the broader trajectory still points toward cooling prices, the disinflation process is progressing more slowly than monetary authorities would prefer.

During the press conference following the meeting, ECB President Christine Lagarde noted that the Eurozone economy continues to show resilience, with most underlying inflation metrics remaining relatively stable. However, she warned that short-term inflation expectations stay elevated and higher energy costs will likely keep pass-through effects moving gradually into food and goods prices.

Lagarde reiterated that the ECB expects inflation to return to its target toward the end of 2027, stressing that long-term inflation expectations remain anchored near 2%. Regarding upcoming monetary policy choices, she avoided giving specific forward guidance, mentioning that the Governing Council did not discuss a pre-set rate path and that future actions will remain strictly data-dependent.

Meanwhile, energy markets continued to reflect geopolitical tensions. Crude oil prices maintained their upward trajectory, with Brent rising above $100 per barrel and West Texas Intermediate (WTI) nearing that threshold, as the Middle East conflict entered its seventh month of hostilities.

In the United States, wholesale inflation data presented a mixed picture. The Producer Price Index (PPI) increased by 0.4% month-over-month in August, coming in line with consensus estimates. However, the annual rate reached 5.4%, slightly above the 5.3% expected by analysts. The core reading rose 0.2% on the month, below the expected 0.3%, while the year-over-year core measure matched forecasts at 4.6%.

The release reinforced expectations that the Federal Reserve might continue tightening monetary conditions. According to the CME FedWatch Tool, markets are currently pricing in nearly a 70% probability of a 25-basis-point rate hike at the upcoming September meeting.

Elsewhere, labor market data points to ongoing economic resilience. Initial jobless claims came in at 206,000, slightly above expectations of 205,000, yet remaining below the previous week's figures and confirming that labor conditions remain reasonably solid.

Against this backdrop, investor attention now shifts to the upcoming U.S. Consumer Price Index (CPI) release. The report will be critical in gauging whether inflationary pressures are continuing to ease or whether the Federal Reserve will need to maintain a more restrictive policy stance over the coming months. Loss of Trendline Support Risks Faster Downside Acceleration_1

Loss of Trendline Support Risks Faster Downside Acceleration_1

Technical Analysis

EURUSD rejected lower after testing resistance around 1.1639. At present, price is consolidating firmly below the 200-period moving average located at 1.1635, while the 100-period moving average sits at 1.1614. This setup keeps open the potential for another attempt to break below the ascending trendline; should a breakdown occur, downward momentum could accelerate toward the local support level around 1.1514.

Looking at momentum oscillators, the RSI currently reads at 46, hovering just beneath the neutral threshold. This leaves ample room for further downside progression before approaching oversold territory. Concurrently, the MACD histogram shows negative momentum that could deepen further as signal lines pull closer to the zero mark. If a bearish crossover develops, oscillators will align to make the path of least resistance point lower.

Trading Recommendations

Trading direction: Sell

Entry price: 1.1639

Target price: 1.1514

Stop loss: 1.1670

Validity: Sep 23, 2026 15:00:00

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Loss of Trendline Support Risks Faster Downside Acceleration

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