Euro edges lower below 1.1700 despite fading Fed hike odds

The Euro (EUR) slipped below 1.1700 against the US Dollar (USD) on Thursday, despite fading expectations of a Federal Reserve (Fed) interest rate hike. The EUR/USD pair dropped around 1.1675 during the early Asian session. The Greenback benefited from softer US economic data and Federal Reserve minutes, which suggested that a rate increase might not be imminent without further progress in reducing inflation.

The US central bank maintained the benchmark interest rate between 3.5%-3.75% following the July policy meeting, with dissenters urging for quicker action to align inflation with the Fed's 2% target. Recent data showed modest monthly price increases, but all major indicators still displayed inflation well above the target. As market expectations for a Fed rate hike at the upcoming meeting decreased to 32.7%, from 47% a month earlier, the Euro gained a tailwind.

Meanwhile, the European Central Bank (ECB) was expected to maintain its hiking cycle, with a 25 basis point (bps) increase to 2.50% at the September 9 policy meeting. Analysts noted that improved growth expectations in the Eurozone were validating the initial rate re-pricing driven by higher inflation. EUR/USD remained bullish in the near term, with the pair trading above the 100-day simple moving average and the Bollinger middle band.

The immediate resistance lay at the upper Bollinger band at 1.1685, while support was found at 1.1675 and the 100-day SMA near 1.1570.