EUR/USD pulls into the middle just above 1.0900

• EUR/USD floundered on Wednesday as markets remain tepid.
• Investors taking a breather after a rough rebalancing late last week.
• Despite breaking higher in recent days, Fiber bids run out of steam.

EUR/USD paddled in a tight circle on Wednesday, churning just above the 1.0900 handle as Fiber traders take a breather from recent volatility sparked by a misprint in key US data last week. EUR/USD flubbed a bullish dash for 1.1000, leaving bids hung out to dry.

Forex Today: Investors now look at weekly US labour data

The rest of the trading week sees limited meaningful economic calendar releases, leaving Federal Reserve (Fed) rate cut bets as the key market driver. Traders get a breather of high-impact data until next week, which sees US Producer Price Index (PPI) inflation next Tuesday, followed by European Gross Domestic Product (GDP) growth on Wednesday alongside US Consumer Price Index (CPI) inflation.

Rate markets have priced in roughly two-to-one odds of a 50-basis-point rate trim from the Fed on September 18, with a further two cuts expected through the rest of 2024. According to the CME’s FedWatch Tool, rate probabilities see an 83% chance of the Fed’s benchmark fed funds rate hitting 425-450 basis points by the end of December.

EUR/USD technical outlook

The EUR/USD pair has dropped from 1.1000 after a failed attempt to rise to that level. The price action is expected to fall back into a descending channel on daily candlesticks. Throughout 2024, EUR/USD has been stuck in a choppy consolidation around the 200-day Exponential Moving Average (EMA), and it looks like this trend will continue as short-term momentum turns bearish once again. Sellers are targeting the 1.0800 level, hoping to break through and test the last major low below 1.0700.

EUR/USD daily chart