EURUSD Breaks MAs Toward 1.08 Ahead of the 25 bps ECB Rate Cut

EURUSD resumed the decline this week after falling below 1.10 earlier this month and stalling last week, as Eurozone inflation falls. The final Eurozone CPI report was released a while ago, while tomorrow we have the European Central Bank meeting which is expected to resume the monetary easing as well, so the bearish pressure continues for this pair.

As the upcoming European Central Bank (ECB) meeting approaches, the anticipation of another 25 basis point rate cut has pushed EUR/USD lower. A more balanced stance from the Federal Reserve, worsening economic conditions in the Eurozone, and increasing global tensions have contributed to a negative sentiment for risk-sensitive currencies. These factors have led to a bearish outlook for EUR/USD in October, with the pair already down 3.5 cents.

EUR/USD Chart Weekly – The 100 SMA at 1.08 Is the Next Target

In the months prior, EUR/USD saw a significant rally, rising from below 1.07 to 1.12 between June and July. However, this uptrend was quickly halted by resistance above the 1.12 level, sparking a decline that intensified in early October. Last week, the 50-week Simple Moving Average (yellow), which had previously offered support, was broken. Now, the 100-week SMA (green) serves as a key level, but the pair has dipped below 1.09, with little resistance to hold it up.

Everyone is expecting the European Central Bank to cut interest rates today by 0.25 basis points, bringing the Refinancing Rate down to 3.40% from 3.65% previously, so that move alone won’t do much harm to the Euro. However if Lagarde’s press conference sounds increasingly worried about the Eurozone economy, then EUR/USD will likely fall below 1.08, as it would mean a faster monetary policy easing cycle. We also had the final Eurozone CPI inflation figures for September.

Eurozone Final CPI Inflation Report for September

EUR/USD Live Chart