Trading EUR/USD Amidst ECB and US CPI Events
It has been a story of relative calm and slight positive technical bias ahead of the fundamental events, with CoT speculators net long while Capital.com clients shift to the middle.
It’s been a story of mostly controlled movement as of late for EUR/USD, digesting multiple factors and ahead of two key fundamental events where US CPI (Consumer Price Index) is set to impact the greenback while the European Central Bank’s (ECB) policy announcement could result in an uptick in activity for the euro.
As is the case when looking at an FX pair, there are factors on both sides that require noting. When it comes to the Eurozone, there hasn’t been much on offer in terms of economic data with the focus on French politics with the naming of a new prime minister shortly after the previous Bayrou was ousted, and where the budget will remain in focus ahead of Friday’s Fitch assessment of French government debt and whether it’ll lower its rating. Until then, the focus will temporarily shift to the ECB where they are expected to hold on rates at (deposit) 2% given inflation isn’t far off their target. In the press conference that follows, the central bank’s President Lagarde is expected to remain cautious and highlight ongoing risks without giving a hint as to when the next rate cut might be.
In between the rate announcement and press conference we’ve got a significant US event with CPI figures for the month of August. Expectations are there was m/m (month-on-month) growth of 0.3% for both headline and core (which excludes food and energy), with the y/y (year-on-year) print of the former rising from 2.7% to 2.9% while the latter holds at 3.1%. It’s above the Federal Reserve’s (Fed) inflation target and rising, but some of its FOMC (Federal Open Market Committee) members have been speaking in a forgiving manner citing both a weakening labor market and seeing tariff-induced inflation as a one-time matter. We did get producer prices yesterday for the same period, and it was a welcoming surprise, contracting 0.1% m/m opposite expectations of growth for both headline and core, with y/y readings dropping to 2.6% and 2.8%, respectively. As for tomorrow, UoM’s (University of Michigan) preliminary consumer sentiment and inflation expectations will be on offer.
EUR/USD’s technical overview, strategies and levels
Looking at the daily time frame and price is above all its main long-term moving averages (MA) but not its short-term ones, on the DMI (Directional Movement Index) front the +DI over the -DI but not by a healthy margin so as to label it positive, an RSI (Relative Strength Index) near the middle, and an ADX (Average Directional Movement Index) nowhere near trending territory. A ‘consolidatory’ technical overview best describes it with a touch of positive technical bias should it remain within its short-term bull channel and borrowing slightly from its ‘stalling bull’ weekly technical overview that as of late has struggled to find an upside breakout.
The fundamental events today could provide a breakout, but likelier on the short-term daily where the levels are narrower compared to the weekly where price has yet to reach this week’s 1st levels. Conformist strategies buying off the daily 1st Support are usually done with a fading strategy when the technical overview has positive bias, but technicals are usually shelved in the shorter term in the face of a fundamental event let alone two where both aspects of the pair are vulnerable. That means if going opposite a level (whether you’re in the conformist or contrarian camp) on the daily time frame should ideally be done with caution waiting for a reversal or a significant one to avoid getting stopped out on any uptick in volatility beyond the 1st levels.
Capital.com’s client sentiment for EUR/USD
Sentiment has shifted from what was majority short 55% yesterday to the middle when it comes to Capital.com’s clients, though we’ve been seeing a lot of shifts lately as sentiment remains near the middle amidst a story of mostly oscillations and controlled movement in its price.
CoT (Commitment of Traders) speculators remain net long in the euro according to last Friday’s report and only just in heavy buy territory at 65%, dropping a notch from 66% in the report prior due to a reduction in euro longs (by 2,726 lots) and a simultaneous increase in shorts (by 721).
Client sentiment mapped on the daily chart
Source: Capital.com
Period: JULY 2025 – SEPTEMBER 2025
Past performance is not an indicator of future results.
EUR/USD’s chart on Capital.com platform with key technical indicators
Source: Capital.com
Period: JULY 2025 – SEPTEMBER 2025
Past performance is not an indicator of future results