• EUR/USD flatlines near 1.1625 in Tuesday’s early European session. 
• Markets are in a “wait-and-see” mode ahead of key US inflation data and the ECB rate decision this week. 
• The ECB is likely to raise the benchmark rates at its September meeting on Thursday. 

The EUR/USD pair trades on a flat note around 1.1625 during the early European trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of the key US inflation data and the European Central Bank (ECB) interest rate decision later this week.

Data released last week showed that the US economy added 162,000 jobs in August, beating the forecasted 56,000. The Unemployment Rate held steady at a tight 4.1% during the same period. Traders are now pricing a nearly 60% chance of a Federal Reserve (Fed) rate hike this month following the upbeat Nonfarm Payrolls (NFP) report.

The attention will shift to the US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation data later for more clues about the US interest rate path. Economists expect August’s inflation report to show a slight monthly acceleration, driven by global energy pressures. Any signs of hotter inflation in the US could lift the Greenback and create a headwind for the pair. 

On the Euro’s front, the ECB is anticipated to hike its benchmark rates for the second time this year when it meets on Thursday. The ECB delivered its first hike since 2023 in its June policy meeting to tame surging prices, but then hit pause at its last meeting in July to see how the conflict would develop.

“The ECB governing council looks certain to raise its deposit rate from 2.25 percent to 2.5 percent,” said Andrew Kenningham, chief Europe economist at Capital Economics.

Eurozone focus turns to ECB as Deutsche Bank flags further tightening

According to Deutsche Bank, the upcoming ECB policy decision on Thursday will be “the key event” for Eurozone markets. Its European economists “expect a 25bp rate increase, taking the deposit rate to 2.50%,” with investors seen closely monitoring “any guidance regarding the likelihood of further tightening.” The bank adds that its economists “now expect an additional hike in December,” with the rationale set out in their preview note, and note that they have upgraded their medium-term outlook, lifting their 2026 and 2027 Euro Area growth forecasts “by 0.3pp and 0.1pp to 0.8% and 1.2% respectively.”

Technical Analysis: EUR/USD keeps a positive tone above the 100-day SMA

In the daily chart, EUR/USD holds a mild bullish bias as it trades above the 20-day Bollinger simple moving average and the 100-day moving average, suggesting underlying dip-buying interest while remaining contained below the upper Bollinger band resistance. The Relative Strength Index (14) hovers in the mid-50s, hinting at positive but not overstretched momentum that could support further gains as long as price holds above its nearby moving average floor.

On the topside, immediate resistance is located at the upper Bollinger band around 1.1710, and a sustained break above this ceiling would open the door to a more decisive bullish extension. On the downside, initial support is seen at the Bollinger midline near 1.1615, with the 100-day moving average at 1.1560 and the lower Bollinger band around 1.1525 providing deeper, layered support in the event of a corrective pullback.