EUR/USD Price Forecast: Remains sticky to 20-day EMA

The Euro (EUR) is marginally higher to near 1.1625 against the US Dollar (USD) during the European trading session on Monday. The major currency pair trades broadly sideways amid an extended weekend in the United States (US) due to Labor Day.

This week, the major trigger for the major currency pair will be the European Central Bank’s (ECB) monetary policy announcement on Thursday and the release of the United States (US) Consumer Price Index (CPI) data on Friday.

Euro focus turns to ECB

According to Deutsche Bank, the upcoming ECB policy decision on Thursday will be “the key event” for European markets. The bank’s European economists “expect a 25bp rate increase, taking the deposit rate to 2.50%,” and they note that investors will be closely watching “any guidance regarding the likelihood of further tightening” beyond this week’s move.

On the US Dollar front, investors will pay close attention to the US CPI data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

Meanwhile, upbeat US Nonfarm Payrolls (NFP) data has prompted Fed’s interest rate hike expectations.

Strategists at BNY highlight that last week’s upside surprise in U.S. labour data, with "nonfarm payrolls (NFP) at 162,000 vs. the expected 55,000," pushed "market-implied odds of a September Fed hike back up to around 60% from 50%," underscoring "how much rate expectations remain tethered to the data backdrop.

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1623, keeping a modest bullish tone as it holds above the 20-day Exponential Moving Average (EMA) at 1.1600.

The pair consolidates after its recent advance, and the Relative Strength Index (RSI) around 56 suggests constructive but not overextended upside momentum.

On the downside, immediate support emerges at the 20-day EMA near 1.1600, with a break below this level likely to weaken the current upward bias and open the door to a deeper pullback towards the psychological level of 1.1500. Looking up, the August high at 1.1713 is the immediate resistance level, followed by the April high at 1.1849.