EUR/USD Price Forecast: Bullish bias remains above 1.1600 ahead of ECB and US inflation

Market impact: moderately bullish EUR/USD, but with high event risk.

The immediate bias favors EUR/USD because the pair is holding above the 1.1600–1.1610 area while the dollar remains pressured by broader yen strength. However, the signal is not a strong fundamental breakout: the reported move near 1.1630 is modest, and traders are waiting for the ECB decision and US inflation data before committing to a larger directional position.

The ECB’s expected 25-basis-point hike appears largely priced in, so the euro’s reaction will depend more on forward guidance and the inflation-growth balance. A hawkish ECB—particularly concern that inflation remains persistent—could support European rate expectations and extend euro upside. Conversely, a cautious message suggesting the hike is close to the end of the tightening cycle could trigger a “buy the rumor, sell the fact” reversal.

US PPI and CPI are the larger near-term dollar risk. Hot inflation would reinforce expectations for a Federal Reserve hike and could lift US yields and the dollar, undermining EUR/USD despite the constructive chart structure. Softer inflation would have the opposite effect by reducing Fed tightening expectations and supporting the pair through the interest-rate differential and weaker-dollar channels. The article notes that September Fed hike expectations remain active, leaving EUR/USD vulnerable to a sharp downside reaction if US data surprises higher.

Technically, the pair’s bullish structure remains valid while it holds above the cited 1.1609 retracement and 1.1579 four-hour 200-period EMA. A sustained move above 1.1698 would improve the near-term upside case, with 1.1786 the next referenced resistance. A decisive break below 1.1579 would weaken the bullish interpretation and expose the 1.1500 area. These are conditional technical reference points, not confirmed targets.

Trader focus:

ECB guidance, US PPI and CPI, US Treasury yields, Fed-rate pricing, and whether EUR/USD can hold above 1.1600 after the data releases. The overall setup is bullish but fragile: euro strength requires either a hawkish ECB, softer US inflation, or both. A hawkish Fed repricing or a dovish ECB communication would invalidate the initial upside bias.