The EUR/USD pair has strengthened, driven by a weaker US Dollar (USD) and a dovish stance from the European Central Bank (ECB). The US Dollar Index (DXY) has declined, as market speculation for a 50 basis points (bps) rate cut by the Federal Reserve (Fed) has increased following the release of US Producer Price Index (PPI) data.
US PPI Data
The PPI data showed a slower-than-expected increase in producer inflation, suggesting a potential slowdown in consumer spending and supporting expectations for a Fed rate cut.
ECB Monetary Policy
The ECB maintained its dovish stance, cutting interest rates by 25 basis points (bps) as expected. ECB President Christine Lagarde emphasized the data-driven approach to future interest rate decisions.
Economic Data
Eurozone Industrial Production decreased by 2.2% year-over-year (YoY) in July, which was better than expected. The Michigan Consumer Sentiment Index for September is expected to remain steady.
EUR/USD Technical Analysis
The EUR/USD pair has broken above the 20-day Exponential Moving Average (EMA), indicating a bullish trend. The 14-day Relative Strength Index (RSI) is currently within the 40.00-60.00 range. A break above 60.00 would signal stronger bullish momentum.