EUR/USD Holds 1.1640 as ECB, U.S. PPI Set Next Move Today

The EUR/USD pair is holding above 1.1600, with the euro trading around 1.1639 on Thursday as investors prepare for two major policy catalysts: the European Central Bank’s interest-rate decision and the U.S. Producer Price Index.

The euro has remained relatively firm despite a sharp rise in global bond yields. Reuters reported that EUR/USD was around $1.1639, while the U.S. Dollar Index eased to 98.73. Brent crude remained above $100 a barrel, adding to inflation concerns across major economies.

The ECB is widely expected to raise its policy rate by 25 basis points to 2.50%, marking its second increase this year. The decision itself is largely anticipated, making President Christine Lagarde’s press conference the more important event for the euro.

Investors will look for guidance on whether the ECB considers the latest energy shock temporary or a threat to broader inflation. A stronger warning about further tightening could support the euro, while a cautious message could limit EUR/USD gains.

1.1625 support anchors the setup

From a technical perspective, EUR/USD remains above the 200-period EMA near 1.1582 on the four-hour chart. The pair has also reclaimed the 23.6% Fibonacci retracement at 1.1625, keeping the short-term structure constructive.

The Relative Strength Index is around 58, indicating positive momentum without reaching overbought territory. The MACD remains marginally above zero with a shallow positive reading, suggesting buyers retain an advantage but have not established strong acceleration.

The immediate resistance is the recent swing high at 1.1709. A decisive break above that level would strengthen the recovery and could open the way toward higher medium-term levels.

On the downside, 1.1625 is now the first technical reference. A sustained break below it would expose the 1.1580-1.1570 area, where the 200-period EMA and the 38.2% Fibonacci retracement converge. A deeper correction could then target 1.1531, followed by 1.1489.

The main technical levels are:

• Current price: Around 1.1639
• First support: 1.1625
• Secondary support: 1.1580-1.1570
• Major resistance: 1.1709

The relatively narrow distance between current price and both support and resistance means Thursday’s economic events could quickly determine direction.

ECB and U.S. PPI drive volatility

The U.S. Producer Price Index is the second major catalyst. The data will provide another indication of whether higher input costs are translating into broader inflation before the Federal Reserve meets on September 15–16.

Markets currently price roughly a 60% probability of a September Fed rate hike, according to Reuters. That expectation has risen as stronger employment data and the renewed oil rally have increased concerns over inflation.

The relationship between oil and monetary policy has become increasingly important. Brent crude remains above $100 after escalating attacks involving U.S. and Iranian forces increased concerns over Middle Eastern energy supplies. Higher energy costs can push producer prices higher and complicate central-bank efforts to control inflation.

That creates a two-sided risk for EUR/USD. A stronger U.S. PPI reading could lift Treasury yields and strengthen the dollar, putting pressure on the pair. A softer figure could reduce Fed tightening expectations and allow EUR/USD to challenge 1.1709.

The euro has its own policy support. A Reuters poll published last week showed economists expected the ECB to raise rates to 2.50% on September 10, although several financial institutions have since shifted toward additional tightening because energy-driven inflation risks have increased. Deutsche Bank now expects another 25-basis-point ECB hike in December, taking its projected terminal rate to 2.75%.

This divergence matters because EUR/USD responds to the relative path of U.S. and eurozone interest rates, not simply to one central-bank decision.

If the ECB signals additional tightening while U.S. PPI comes in below expectations, the combination would favor the euro. A hawkish Fed repricing alongside a cautious ECB would produce the opposite result.

For now, the technical and fundamental setup points to 1.1625 as the immediate defense for buyers and 1.1709 as the critical upside barrier.

Conclusion

EUR/USD is holding near 1.1640 as traders await the ECB’s expected 25-basis-point rate hike and the U.S. PPI report. The pair remains technically constructive above 1.1625 and the four-hour 200-period EMA near 1.1582, while 1.1709 is the key upside barrier. ECB President Christine Lagarde’s guidance will determine whether markets expect further eurozone tightening, while U.S. PPI could shift Federal Reserve rate expectations. A break above 1.1709 would strengthen the bullish structure, while a move below 1.1625 would expose deeper support near 1.1580.