EUR/USD Price Forecast: Slides to four-week low as hawkish Fed bets accelerate

The Euro (EUR) is down 0.28% to near 1.1565 against the US Dollar (USD) during the European trading session on Monday. The major currency pair comes under pressure as traders have raised hawkish Federal Reserve (Fed) after the release of the sticky United States (US) Consumer Price Index (CPI) data for August.

The CPI report showed on Friday that the headlines inflation remained sticky at 3.4% Year-on-Year (YoY), as expected. The core CPI – which excludes volatile food and energy items – cooled down to 2.4% from 2.5% in July.

Month-on-month headline CPI grew at a faster pace of 0.4%, as expected, against the previous reading of 0.1%. The core CPI also rose faster by 0.3% than expectations and the prior release of 0.2%.

A faster growth in monthly inflation data has prompted hawkish Federal Reserve (Fed) interest rate expectations further for the September policy meeting. Hawkish Fed bets also increased last week after the release of the hotter-than-expected US Producer Price Index (PPI) growth for August.

On the Euro front, the European Central Bank (ECB) hiked policy rates last week, as expected, but didn’t deliver any meaningful comments regarding the interest rate outlook.

"Discussion was focused on today's decision, did not debate future rate path," ECB President Christine Lagarde said at the press conference. She added, “Can't anticipate what will be the next move."

EUR/USD Technical Analysis

In the daily chart, EUR/USD trades at 1.1565, retaining a mildly bearish near-term bias as it holds beneath the 20-period exponential moving average (EMA) at 1.1602. The pair has slipped back under this short-term trend benchmark, suggesting topside attempts are increasingly capped, while the Relative Strength Index (RSI) at 45 leans toward a loss of bullish momentum rather than outright oversold conditions.

On the topside, initial resistance is defined by the 20-period EMA at 1.1602, and a daily close above this level would be needed to ease the current pressure and reopen the path toward higher highs. Looking down, the pair could be exposed to the psychologocal level of 1.1500 if it fails to hold the immediate support of 1.1560.