EUR/USD Holds Near Lows as Eurozone CPI Confirms Stable Inflation

The EUR/USD pair is posting modest losses during Wednesday’s European session, trading around 1.1638 at the time of writing, after briefly touching a fresh weekly low near 1.1620 earlier in the day. A cautious market tone ahead of the upcoming FOMC Minutes and the Federal Reserve’s Jackson Hole symposium is fueling demand for the safe-haven US Dollar.

Final Eurozone Consumer Price Index (CPI) data released by Eurostat confirmed that inflation remained steady in July, in line with expectations. However, the data failed to provide support for the Euro. Earlier, ECB President Christine Lagarde spoke at the World Economic Forum in Geneva, but her remarks did little to boost sentiment. She noted that recent trade agreements have not eliminated economic uncertainty and projected weaker growth in the fourth quarter, although she acknowledged the Euro Area’s resilience throughout the year.

Outside the Eurozone, geopolitical developments also weighed on the Euro. Initial optimism following a meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy faded after the Kremlin downplayed the likelihood of a near-term meeting between Russian President Vladimir Putin and Zelenskyy. This has cooled hopes for progress in Russia-Ukraine peace talks and added further pressure on the Euro.

Later today, markets will closely analyze the Minutes from the Federal Reserve’s latest FOMC meeting. However, their impact may be limited, as the meeting took place before key labor and inflation data that have since reshaped expectations for monetary policy. As a result, investors are likely to focus more on Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday for clearer signals on the central bank’s near-term direction.

Daily Digest Market Movers: Risk Aversion Drives US Dollar Higher

• With a lack of major macroeconomic data, market sentiment has turned risk-averse, fueling demand for the safe-haven US Dollar. Wall Street experienced a sharp sell-off led by the tech sector, as growing concerns over increased government intervention weighed on investor confidence. This negative tone extended to Asian markets and is expected to impact European stocks as well, adding further support to the USD while pressuring the Euro.
• Geopolitical concerns also continue to cloud market sentiment. Hopes for progress in the Russia-Ukraine peace process were dampened after the Kremlin offered Moscow as the venue for a meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy—a proposal that was rejected by Ukraine. The Kremlin’s subdued response has left negotiations in limbo, further weakening investor optimism.
• In the Eurozone, Eurostat confirmed its preliminary Consumer Price Index (CPI) estimates for July, showing that headline inflation remained steady at 2% year-over-year. Meanwhile, core inflation dipped by 0.2% on a monthly basis but rose by 2.3% annually. Despite the stability in inflation data, the Euro failed to gain traction amid the prevailing risk-off environment.
• Looking ahead, markets await the release of the Federal Reserve’s minutes from its latest Federal Open Market Committee (FOMC) meeting, scheduled for later on Wednesday. While the minutes are expected to highlight divisions among policymakers, they may have limited market impact, as they were compiled before the release of crucial labor and inflation data that shifted market expectations toward a potential rate cut in September. As such, the focus is likely to shift to Fed Chair Jerome Powell’s upcoming speech at the Jackson Hole symposium for more current policy insights.

Technical Analysis: EUR/USD Tests Lower Bound of Weekly Range

Technically, EUR/USD is testing support at the lower boundary of its recent range near 1.1635, after once again being capped by the descending trendline from early July highs. The 4-hour Relative Strength Index (RSI) has dipped below the 50 mark, reflecting rising bearish momentum.

A clear break below the August 14 low of 1.1630 would signal a breakdown of the uptrend that began on August 1 and could accelerate losses toward the 1.1590 zone—an area that coincides with the August 11 low, the August 4 high, and the 38.2% Fibonacci retracement of the early August rally. Further downside targets include the 50% retracement at 1.1560 and the August 5 low near 1.1530.

On the upside, Tuesday’s high at 1.1690 could act as the initial barrier for bulls, followed by the descending trendline from July 1 near 1.1715 and the August 13 high at 1.1730.