17-month low for euro as ECB leaves rates unchanged and US PCE inflation picks up

• 1.1105: EUR/USD Hits Fresh 17-Month Low as US Dollar Gains.
• Persistent inflation risks accompanied the European Central Bank’s decision to leave interest rates unchanged.
• A December Fed rate hike remains in focus as robust US growth and faster inflation strengthen expectations of tightening.

1.1105 marks a fresh 17-month low for EUR/USD. Extending its losses on Thursday, the pair reached its weakest level since May 2025. At the time of writing, it trades near 1.1120, down 0.28% on the day. The Euro (EUR) remains under pressure against the US Dollar (USD), which is drawing support from persistent inflation and resilient economic growth.

Following its October monetary policy meeting, the European Central Bank (ECB) confirmed on Thursday that key interest rates would stay unchanged, as expected. Rates on the main refinancing operations, marginal lending facility and deposit facility stand at 2.65%, 2.90% and 2.50%, respectively.

Higher energy prices present upside risks to inflation and downside risks to economic growth, the ECB warned. Underlying inflation, however, is broadly stable, and wages have not yet responded significantly to the energy shock. Reaffirming that decisions would depend on incoming data, the central bank made no commitment to a predetermined interest rate path.

Earlier releases offered a mixed assessment of the Eurozone economy. October’s Business Climate Indicator from the European Commission rose to 0.09 from September’s -0.05, its first positive reading in three years. By contrast, Consumer Confidence held at -17.9, and the Economic Sentiment Indicator fell to 96.9, missing expectations of 97.5.

President Christine Lagarde will step down in February 2027, the ECB Governing Council also announced. No details were given on her successor. For further guidance on monetary policy, investors are now looking to Lagarde’s press conference.

In the US, September’s Personal Consumption Expenditures (PCE) Price Index increased 3.6% year on year, compared with 3.4% in August, according to the US Bureau of Economic Analysis (BEA). Inflation rose 0.5% on a monthly basis. The Core PCE Price Index recorded annual growth of 3.1%, against 3% previously.

The releases come after Wednesday’s Federal Open Market Committee (FOMC) meeting, at which a 10-2 vote kept interest rates at 3.75%-4.00%. A 25-basis-point rise was favoured by two policymakers. Federal Reserve (Fed) Chair Kevin Warsh reaffirmed his commitment to restoring price stability.

US Gross Domestic Product (GDP) growth provided additional support for the Greenback, reaching an annualised 3.4% in the third quarter and exceeding the 3.2% forecast. Initial Jobless Claims also fell to 194K, below the projected 199K, confirming continued labour market resilience.

The CME FedWatch tool puts the probability of a December rate hike at 83%. Sticky inflation and firm economic activity are strengthening expectations that the Fed will tighten policy further.

1.1105 support in focus: EUR/USD technical outlook

At 1.1130 on the four-hour chart, EUR/USD retains a bearish short-term outlook. It sits below both the 100-period simple moving average (SMA) at 1.1196 and the 200-period SMA at 1.1293. A broader descending trend line around 1.1254 adds to the pressure. With the Relative Strength Index (14) easing towards the lower middle of its range near 36, selling interest appears persistent, though the indicator has not yet reached oversold extremes.

The horizontal level near 1.1105 provides immediate downside support. Below it, a deeper floor around 1.1050 could prompt sellers to begin taking profits. Any recovery would initially meet the 100-period SMA at 1.1196. As long as the bearish structure holds, the descending trend-line area near 1.1254 and the 200-period SMA at 1.1293 are likely to limit a more sustained rebound.

(The technical analysis of this story was written with the help of an AI tool. Know more.)