The EUR/USD currency pair has reached a new low, trading below 1.0950, marking its weakest point in nearly two months. This decline follows the release of the minutes from the recent Federal Open Market Committee (FOMC) meeting, which conveyed a hawkish stance and bolstered the US Dollar. The market is now keenly anticipating the upcoming Consumer Price Index (CPI) data for September, which could further influence currency movements.
On Wednesday, the EUR/USD experienced intensified bearish pressure, closing significantly lower as traders reacted to the Fed’s outlook. The minutes hinted that while a considerable number of Fed officials backed a 50 basis points rate cut, there was a broader agreement that this action would not dictate the timing of future reductions. Some members favored a more cautious approach, suggesting a potential 25 basis points cut instead.
Today’s focus shifts to the US Bureau of Labor Statistics, which is set to announce the September CPI figures. Analysts expect the annual inflation rate to dip to 2.3%, down from 2.5% in August. The core CPI, which excludes food and energy costs, is projected to show a modest increase of 0.2% month-over-month.
For investors to reassess the likelihood of a significant Fed rate cut in November, a markedly low reading — such as 0% or less in core CPI — would be essential. A scenario like this could offer some relief to the EUR/USD pair. Conversely, if the data meets or exceeds expectations, it is likely to cement the USD’s strength in the market.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart indicates that the currency pair is approaching oversold conditions. Immediate resistance exists around 1.0950, and if the pair can maintain this level as support, it may push towards 1.1000 or even 1.1050. On the downside, key support levels are identified at 1.0900, 1.0870, and 1.0800.
