15 September 2025,06:34
Daily Market Analysis
15 September 2025, 06:34
*ECB hawkish hold contrasts with Fed easing expectations, boosting EUR appeal.
*Sentiment lifted by reduced safe-haven demand and firmer Eurozone confidence.
*Gains risk overheating: stretched positioning leaves EUR vulnerable to U.S. data surprises.
The euro has pushed toward 1.1780 against the dollar, powered by one of the market’s clearest themes: policy divergence. The ECB’s decision to hold rates steady at 2.00%, while declaring the “disinflation process complete,” signaled the end of its hiking cycle without shifting prematurely to cuts. Revised inflation forecasts—2025 headline inflation projected at 2.1%—gave credibility to this hawkish hold. This stands in sharp contrast to U.S. markets, where expectations for a Fed easing cycle continue to mount as inflation cools and labor markets soften.
The widening policy gap has increased the euro’s relative yield appeal, attracting capital flows into euro-denominated assets. Sentiment has been further buoyed by easing geopolitical tensions, with no immediate escalation in Ukraine’s refinery strikes or Middle East hotspots, reducing demand for the dollar as a safe haven. The Eurozone’s latest investor confidence survey also ticked higher, reflecting optimism that the bloc has navigated the worst of its inflation-growth tradeoff. Technically, EUR/USD has broken out of bullish patterns, with momentum pointing toward the three-year highs near 1.1830.
However, the euro’s gains are now running ahead of fundamentals. Yield spreads between U.S. Treasuries and German bunds suggest fair value is lower, indicating much of the optimism is already priced in. This leaves the single currency vulnerable to sharp pullbacks should U.S. inflation prints surprise to the upside or if the Fed tempers easing bets. With positioning stretched, the euro’s short-term fate hinges on whether data sustains the divergence narrative or forces markets to reassess.
EURUSD is trading around 1.1720, holding steady after bouncing off the ascending trendline support near 1.1700. Price remains caught between the immediate resistance at 1.1785 and the key floor at 1.1690, leaving the pair consolidating within a narrowing range. A break above 1.1785 could trigger momentum toward 1.1900, while sustained weakness below 1.1700 would shift focus back to 1.1610 and the deeper support at 1.1585.
Momentum signals are balanced but lack conviction. The RSI sits near 52, reflecting a neutral stance with no clear directional bias. Meanwhile, the MACD is flat around the zero line, underscoring indecision and aligning with the sideways price structure.
Overall, EURUSD remains range-bound, with the 1.1690–1.1785 zone serving as the key battleground. A decisive breakout on either side will be needed to confirm the next directional trend.
Resistance levels: 1.1785, 1.1900
Support levels: 1.1690, 1.1585
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