Euro retreats from one-month high ahead of ECB meeting

EUR/USD Retreats Slightly After Hitting One-Month High as ECB Decision Nears

EUR/USD Softens as Eurozone CPI Disappoints

The Euro (EUR) declined by 0.3% against the US Dollar (USD) on Tuesday, trading as a mid-performer among G10 currencies after briefly hitting a one-month high overnight. The retreat follows the release of Eurozone Consumer Price Index (CPI) data, which came in slightly below expectations.

• Headline CPI: 1.9% YoY (vs. 2.0% expected)
• Core CPI: 2.3% YoY (vs. 2.4% expected)

This weaker inflation print casts a shadow over recent Euro strength, though the underlying EUR/USD recovery has been supported by fundamental shifts in interest rate differentials and ECB expectations.

Markets Brace for ECB Policy Announcement

Traders are now turning their attention to Thursday’s European Central Bank (ECB) meeting, where a 25 basis point rate cut is fully priced in. However, analysts suggest the tone of the policy statement will be crucial:

“The real risk lies in the ECB delivering a hawkish cut — signaling this is not the start of a cutting cycle,” analysts say.

Spreads in European yields have tightened, and market bets on extended easing have been pulled back in recent sessions, giving EUR/USD a tailwind. The key question is whether Thursday’s message confirms that outlook.

EUR/USD Technical Picture

• Resistance: 1.1450 (overnight high)
• Support: 1.1350 (previous consolidation zone)

If the ECB surprises with a more hawkish tone, EUR/USD could reclaim and hold above 1.1450, but dovish guidance may reverse recent gains.

Related Articles on Tredu:

• Will the ECB Deliver a Hawkish Cut? What Markets Expect
• EUR/USD Forecast: Can the Euro Hold Its One-Month High?
• Eurozone Inflation Softens: What It Means for the Euro