As the European Central Bank chose to keep interest rates unchanged, along with the US Consumer Price Index ( CPI ) report meeting market expectations, EUR/USD experienced a certain recovery during the North American trading session. As of the time of writing, the trading price of the currency pair was 1.1733, an increase of 0.34%.

In the United States, the latest inflation data shows that consumer prices have risen, but remain consistent with estimates, maintaining the status quo. The initial jobless claims data indicates that the number of Americans filing for unemployment benefits has exceeded expectations, reaching the highest level in nearly four years. This data has boosted market expectations for a potential interest rate cut by the Federal Reserve.

As for the euro, the European Central Bank has maintained the deposit interest rate at 2% and stated that adjustments to monetary policy will be made on a meeting-by-meeting basis, relying on data. The Governing Council emphasized that they do not have a predetermined interest rate path.

In terms of market dynamics, the U.S. Consumer Price Index (CPI) rose to 2.9% year-on-year in August, in line with expectations, while the core CPI remained unchanged at 3.1%. Market reactions were muted, and expectations for a Federal Reserve interest rate cut were not significantly affected. Meanwhile, the number of initial unemployment claims for the week ending September 6 surged to 267K, far exceeding the forecast of 235K and higher than the previous 237K, indicating weakness in the labor market. European Central Bank President Christine Lagarde mentioned that the deflation process has ended, the policy is in good shape, and stated that trade uncertainties have diminished, with economic growth risks skewed to the downside.

In addition, the U.S. dollar index measuring the dollar against six currencies, (DXY), fell by 0.28%, currently at 97.53. A well-known rating agency predicts that the Federal Reserve will cut interest rates by 25 basis points in September and December, and will make three more cuts in 2026. In contrast, it does not expect the European Central Bank to cut rates again. After the data release, traders have priced in a 90% probability of a 25 basis point cut by the Fed, while the probability of a 50 basis point cut is 10%. The European Central Bank is expected to keep interest rates unchanged, with a probability of 93%, and only a 7% probability of a 25 basis point cut.

In terms of technical analysis, EUR/USD formed a bullish engulfing pattern on Thursday, indicating a potential upward movement in the future. Additionally, momentum has improved; even though the relative strength index (RSI) has slightly retreated, it still shows an upward trend, exceeding Wednesday's 52 to reach 56. If EUR/USD breaks through 1.1750, the next key resistance levels will be 1.1800 and the yearly high of 1.1829. Otherwise, if the currency pair falls below 1.1700, the first support level will be at the 20-day SMA level at 1.1677 and the 50-day SMA level at 1.1658.

Common questions about the Euro: The Euro is the currency of the 19 EU countries in the Eurozone and is the second most traded currency in the world after the US Dollar. In 2022, the Euro accounted for 31% of all foreign exchange transactions, with an average daily trading volume exceeding $2.2 trillion. EUR/USD is the most actively traded currency pair globally, accounting for an estimated 30% of the trading volume, followed by EUR/JPY(4%), EUR/GBP(3%), and EUR/AUD(2%).

The European Central Bank (ECB) is the reserve bank of the Eurozone, located in Frankfurt, Germany, responsible for setting interest rates and managing monetary policy. Its main mission is to maintain price stability, which means controlling inflation or stimulating growth. Relatively high interest rates—or expectations for higher rates—usually benefit the euro. The ECB's Governing Council meets eight times a year to make monetary policy decisions. The members involved in the decision-making include the heads of the central banks of Eurozone countries and six permanent members, including ECB President Christine Lagarde.

Inflation data has a significant impact on the value of the euro, with the Eurozone inflation data measured by the Harmonized Index of Consumer Prices ( HICP ) being important economic data. If inflation exceeds expectations, especially above the European Central Bank's 2% target, the European Central Bank will be forced to raise interest rates to control inflation. Relatively high interest rates typically benefit the euro, as they make the region more attractive to global investors.

Economic data can also affect the value of the euro, such as GDP, manufacturing and services PMI, employment, and consumer confidence surveys. These indicators can signal the health of the economy, and a strong economy can not only attract more foreign investment but may also prompt the European Central Bank to raise interest rates, thereby directly strengthening the euro. Conversely, if the economic data is weak, the euro may weaken. In particular, the data from the four largest economies in the eurozone (Germany, France, Italy, and Spain) is especially important, as they account for 75% of the eurozone economy.

The trade balance is an important data release for the euro, measuring the difference between the revenue a country earns from exports and the expenditure on imports over a certain period. If the export goods produced by a country are in high demand from overseas buyers, the country's currency will appreciate due to the increased demand, thus a positive net trade balance will strengthen the currency, and vice versa.