18 September 2025,05:43
Daily Market Analysis
18 September 2025, 05:43
*The ECB left rates unchanged, underscoring policy stability relative to peers moving toward more aggressive easing.
*Eurozone inflation printed at 2.0% in August, exactly at target, giving policymakers room to stay cautious while keeping rate cuts off the table for now.
*France’s sovereign downgrade to A+ reignited concerns over fiscal discipline and political fragility, which could limit investor appetite for the single currency.
The euro is trading cautiously as investors weigh the European Central Bank’s steady policy stance against rising fiscal and political risks in the bloc. The ECB opted to leave interest rates unchanged, emphasizing a wait-and-see approach at a time when other central banks are moving more decisively toward easing. August inflation data showed headline CPI at 2.0%, exactly on target, offering reassurance that price pressures are under control but also removing urgency for further tightening.
While policy stability provides the euro with a measure of support, structural risks are resurfacing. Fitch’s downgrade of France’s sovereign rating to A+ has sharpened concerns over fiscal discipline and highlighted political fragility in a core member state. Combined with subdued growth momentum across the euro area, these factors are tempering appetite for the single currency despite its relative yield stability compared to peers.
In the short term, EUR’s trajectory will hinge on fresh economic data and ECB commentary. If incoming numbers confirm inflation is anchored at target and the Fed turns more dovish, the euro could attract flows as a policy-stable alternative. Conversely, renewed fiscal stress in France or broader eurozone weakness would likely cap upside potential and keep EUR trading defensively.
EURUSD surged past the 1.1800 barrier, extending gains toward 1.1900 before encountering resistance. The sharp rejection from that upper level signals profit-taking, though the pair continues to hold well above the ascending trendline support near 1.1690. A sustained push above 1.1900 would confirm bullish continuation, paving the way toward higher targets. Conversely, a pullback below 1.1800 could invite a deeper correction toward 1.1750 and then 1.1690.
Momentum indicators highlight overextended conditions. The RSI retreated from 70, easing back into neutral territory after briefly entering overbought levels, reflecting waning upside momentum. Meanwhile, the MACD remains in positive territory, but its histogram shows signs of flattening, suggesting momentum is cooling.
Overall, EURUSD is still supported by an upward structure, with 1.1800 now acting as a key pivot. Holding above it favors buyers, while failure to defend it could shift the focus back toward the trendline at 1.1690.
Resistance levels: 1.1850, 1.1900
Support levels: 1.1750, 1.1690
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