The EUR/USD currency pair continues to experience downward momentum, trading near 1.0850 on Thursday, marking its lowest level in several months. This decline reflects a broader bearish trend as the pair struggles to recover following a nearly 0.3% loss on Wednesday. Investors are currently focused on the upcoming monetary policy decisions from the European Central Bank (ECB).
Market analysts anticipate that the ECB will choose to lower key interest rates by 25 basis points after its October policy meeting. While this move is already largely expected and factored into market pricing, the real focus will be on the responses from ECB President Christine Lagarde during the post-meeting press conference scheduled for 12:45 GMT. Her comments will be crucial in shaping future market sentiment toward the EURO .
If Lagarde downplays the recent soft inflation data for the Eurozone and emphasizes expectations of rising price pressures towards year-end, this might be interpreted as a signal that the ECB may hold off on additional rate cuts in December. Such a stance could provide support for the EURO . Conversely, if she emphasizes the deteriorating economic conditions within the Eurozone, it could lead to increased selling pressure on the EURO , further pushing the EUR/USD lower.
On the US side, key economic indicators of September Retail Sales and weekly Initial Jobless Claims will be released. A significant decrease in new unemployment claims could bolster the US Dollar, adding another layer of influence on the EUR/USD exchange rate.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart indicates that the EUR/USD is currently oversold, sitting below 30. Should the pair attempt a correction, immediate resistance can be found around 1.0900, with further levels at 1.0950 and 1.1000. Meanwhile, support levels are established at 1.0800 and 1.0780, posing potential barriers should the downturn persist.
