EUR/USD Forecast: Holds above 1.1600 as bulls eye ECB, PPI

The EUR/USD pair attracts some dip-buyers during the Asian session on Thursday, though it lacks follow-through as traders seem hesitant ahead of the European Central Bank (ECB) meeting and the US Producer Price Index (PPI). Spot prices currently trade just below mid-1.1600s and remain close to a one-and-a-half-week high, touched on Wednesday.

A 25 basis point (bps) ECB rate hike for the second time this year is considered a done deal, suggesting that the focus will be on the post-meeting press conference. Traders will scrutinize comments from ECB President Christine Lagarde for cues about the future policy path, which, in turn, will drive the Euro and provide some meaningful impetus to the EUR/USD pair.

Traders will further confront the release of the US inflation data, which will be crucial for the Federal Reserves (Fed) decision at the September 15–16 meeting. In the meantime, rising Fed rate hike bets, along with further escalation of tensions between the US and Iran, could offer some support to the safe-haven US Dollar (USD) and keep a lid on the EUR/USD pair.

From a technical perspective, spot prices stay above the 200-period Exponential Moving Average (EMA) on the 4-hour chart, at 1.1582, and reclaimed the 23.6% Fibonacci retracement at 1.1625. Moreover, constructive momentum indicators suggest steady but not aggressive upside pressure. The Relative Strength Index hovers just below the overbought threshold around 58.

Adding to this, the Moving Average Convergence Divergence (MACD) line remains marginally above zero with a shallow positive profile. Meanwhile, the next significant resistance is seen near the recent swing high, at 1.1709. A clear break above the said barrier would open the door to a more sustained recovery phase toward higher medium-term levels.

On the downside, immediate support emerges at the 23.6% Fibo. retracement at 1.1625, reinforced by the 200-period EMA and the 38.2% retracement clustered around the 1.1580–1.1570 region. A deeper pullback would expose the 50.0% retracement near 1.1531 and the 61.8% level around 1.1489.