• The EUR/USD outlook reflects market caution amid a divided Fed and stable ECB. 
• The broader market sentiment remains neutral while markets price in a 71% chance of a December Fed cut. 
• Traders look forward to the EUR CPI flash estimate Y/Y and the EUR prelim CPI M/M for further policy cues. 

The EUR/USD outlook indicates a downtrend, trading around 1.1570 as investors digest the diverging policy signals from the ECB and Fed. The pair holds steady as the ECB maintains a stable tone while the Fed holds firm amid looming uncertainty regarding the Fed’s December cut. 

The US Dollar Index stood near 99.50, reflecting minimal reaction to the recent US releases. According to the CME FedWatch Tool, markets are pricing in a 71% probability of a December cut. Fed Chair Powell remarked that a December rate cut is yet to be confirmed, as there is limited data due to the ongoing Federal government shutdown and shifting market sentiment. 

On Wednesday, the Fed announced a 25 bps cut, reducing the Federal funds to 3.75%-4.00%. However, the decision was not unanimous, as Governor Miran preferred a 50 bps cut, while President Schmid favored unchanged rates. Fed Chair Powell emphasized that the rate cuts depend on the next economic data.  

In the Eurozone, the ECB maintained the Refinancing Rate at 2% for a third meeting. President Lagarde affirmed that policy is in a good place amid the optimistic global situation, stabilizing the macro data. The Eurozone GDP growth exceeded forecasts at 0.2% in Q3, while the German sentiment witnessed optimism. But inflation is likely to stay below the 2% forecast in the next year. Other ECB officials, like Martin Kocher, noted the improving situation but underscored the ongoing uncertainty. 
 

EUR/USD Daily Key Events

The major events in the day include

• EUR Core CPI Flash Estimate Y/Y
• EUR CPI Flash Estimate Y/Y
• EUR Italian Prelim CPI m/m

On Friday, traders await the EUR CPI flash estimate Y/Y and the EUR preliminary HICP data for insights into the inflation trends and further policy direction.
 

EUR/USD Technical Outlook: Gains Capped by 1.1620
 

(Click on image to enlarge)

EUR/USD 4-hour chart
 

The EUR/USD 4-hour chart reflects a bearish bias. After failed recovery attempts, the price stays below all key MAs. The cluster of 20-, 50-, and 100-MAs near 1.1620 area poses as a stiff resistance. Beyond this confluence, the 200-MA near 1.1680 remains a tough nut to crack. 

The RSI near 30.0 indicates the pair tilting to the oversold region. This signals a brief correction in the near term. If the price manages to hold above 1.1620, it could open room towards 1.1690 and 1.1700. Conversely, if the pair drops below 1.1500, it could extend the downside towards 1.1460 and 1.1430. 
 

Support Levels

• 1.1550
• 1.1530
• 1.1500
   

Resistance Levels

• 1.1620
• 1.1680
• 1.1700

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