EUR/USD steadies near $1.17 as ECB meeting and U.S. inflation data loom

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Euro holds $1.17 ahead of ECB

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Jainam Mehta

10.09.2025

EUR/USD steadies near $1.17 as ECB meeting and U.S. inflation data loom — The euro steadies near $1.17 as markets focus on ECB policy direction and U.S. inflation outcomes

The euro hovered near $1.17 against the U.S. dollar on Wednesday, with investors bracing for a European Central Bank policy decision and U.S. inflation releases that could set the currency’s short-term direction. While the ECB is expected to keep rates unchanged for a second straight meeting, traders are weighing whether incoming U.S. data could accelerate dollar weakness by forcing the Federal Reserve into deeper cuts.

Highlights

- Euro steadies at $1.17 as ECB expected to hold policy.

- Fed rate cut bets hinge on upcoming U.S. inflation data.

- Political and geopolitical risks add fragile backdrop.

The ECB has room to pause as eurozone inflation remains anchored around target for a third consecutive month, reducing pressure for additional tightening. A steady policy stance reflects caution amid lingering trade uncertainty, even as euro fundamentals appear stable.

EUR/USD price dynamics (Source: TradingView)

In the United States, softer labor market data last week reinforced expectations of a September rate cut, with the debate now focused on whether the Fed will trim by 25 basis points or opt for a bolder 50 basis point move. A softer inflation print would strengthen the case for aggressive easing, likely extending euro gains, while stronger readings could temper momentum.

Political backdrop and geopolitical tension

French President Emmanuel Macron moved to stabilize domestic politics by appointing Sébastien Lecornu as prime minister, his third appointee in a year. The change underscores ongoing instability in France but has had little immediate market impact.

Geopolitics, however, remain a risk. U.S. President Donald Trump’s call for the European Union to impose 100% tariffs on imports from India and China added to tensions, linking the measure to pressure Russia over Ukraine. Meanwhile, Poland shot down Russian drones that entered its airspace, highlighting the security fragility facing Europe. These developments reinforce the euro’s sensitivity to both political and military risk.

Technical picture shows range-bound trade

On the 4-hour chart, EUR/USD continues to consolidate between $1.1650 and $1.1750, with repeated rejections near the upper bound. The 20- and 50-period EMAs aligned around $1.1670–$1.1650 provide strong short-term support.

A decisive break above $1.1750 could clear the way toward $1.18, while slipping under $1.1650 risks a pullback toward $1.16. The RSI remains supportive, though not stretched, suggesting room for movement in either direction once data catalysts arrive.

Outlook

The euro’s next move will be dictated by Thursday’s ECB meeting and the U.S. inflation prints that follow. For now, the pair appears range-bound, with $1.1650 acting as a firm floor and $1.1750 as a ceiling. Traders will remain cautious until clarity emerges, with the balance of risk skewed by whether the Fed delivers the larger rate cut that markets are beginning to price.

As previously discussed in earlier coverage, the euro’s resilience has often depended less on European political shifts and more on U.S. monetary dynamics. The same dynamic is visible now, with the dollar’s reaction to inflation and Fed decisions likely to be the decisive factor.

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