September 7 Chart of the Week: EUR/USD overview, US CPI, and ECB rate decision

• US inflation pressures cooling ahead of crucial CPI print: US PPI final demand has rolled over to 4.689% YoY from its spring peak near 6.0% YoY¹, easing producer price pressures ahead of Friday’s highly anticipated CPI release.
• ECB 25-basis-point rate hike fully priced in amid diverging inflation: A 25 bps rate hike to 2.50% this Thursday is 100% priced in by financial markets³, forcing the ECB to navigate rising headline HICP (3.30% YoY) against a cooling core inflation backdrop (2.40% YoY)⁴.
• EUR/USD consolidates above critical confluence of support: EUR/USD remains steady above a key confluence support zone of 1.1600–1.1620, holding onto structural gains after its late-August breakout above an inverted complex head-and-shoulders neckline.

Focusing on the six months from March 2026 to August 2026, the US producer price index (PPI) final demand followed a distinct peak-and-rollover trajectory, transitioning from sharp re-acceleration to a cooling trend. Data from this timeframe indicate that, although producer inflation remains elevated relative to the 2023–2024 lows of 1.0%, the intense inflationary pressure observed in early 2026 has visibly lost momentum.

Headline PPI final demand peaked between March and May 2026, near 6.0% YoY, driven by sharp rises in both service costs and energy input prices. Over the subsequent trailing 3 to 4 months (June–August 2026), headline PPI steadily rolled over down to the current 4.689% YoY. Meanwhile, Core PPI (excluding food and energy) followed a similar arc, rising above 5.0% in spring before pulling back to 4.158% YoY¹, significantly narrowing the gap between Headline and Core as energy contributions stabilized.

The U.S. consumer price index (CPI) report for August is set for release this Friday, September 11, at 8:30 a.m. ET by the Bureau of Labor Statistics. Following a stronger-than-expected labor market report, this inflation reading serves as the critical final piece of macro data before the Federal Reserve’s upcoming interest rate policy decision. Consensus estimates, according to the Bloomberg economic calendar, project headline CPI to increase by 0.4% month-over-month, largely driven by rising energy and gasoline prices, while annual headline inflation is expected to hold near 3.4%².

Investors and policymakers are primarily focused on the core CPI measure—which excludes volatile food and energy costs—to gain a clearer picture of underlying price pressures. Core CPI is expected to rise 0.2% for the month, potentially allowing year-over-year core inflation to ease slightly to 2.4%. A softer-than-expected core print could give the Federal Reserve sufficient room to pause rate hikes, whereas a continuing elevated inflation would reinforce arguments for further monetary tightening.

The European Central Bank is widely expected to raise its benchmark interest rate by 25 basis points to 2.5% this Thursday, September 10, as it navigates accelerating inflation and a resilient eurozone economy³. Markets have largely priced in this September hike, and investors will be closely monitoring the accompanying press conference with President Christine Lagarde for clues on the future rate path, particularly amid shifting expectations for higher-for-longer rates.

Looking ahead to the October 28 meeting, a 2.50% rate remains the most probable outcome at 78.0%, with a 22.0% chance of a further increase to 2.75%. By the December 16 meeting, expectations shift higher, with a 2.75% interest rate taking over as the most likely target at 55.6%, alongside a 31.2% probability of remaining at 2.50% and a 13.2% chance of reaching 3.00%³.

Between March and August 2026, the Eurozone headline HICP transitioned from a period of spring consolidation in the 2.8%–3.0% range into a sharp summer re-acceleration, reaching a peak of 3.30% YoY in August. Conversely, Core HICP steadily cooled to 2.400% over the same timeframe, signaling a widening divergence, with recent inflationary pressures driven primarily by energy and transport rather than by broad domestic demand⁴.

Consequently, the European Central Bank faces a delicate environment in which it must navigate non-core headline spillovers without overtightening monetary policy.

• The overall chart context shows that, following a break below an uptrend in mid-2025, price action traded within a widening formation, as marked by the blue lines on the chart above. In June 2026, following an exhaustion gap and after price action found support above the lower border of the formation, a new uptrend began, pushing price action towards the neckline of a long-term inverted complex head-and-shoulders pattern, which began in January 2026. (Shoulders marked by blue arcs and the neckline in red).
• Following the FOMC July 29th meeting minutes, which were released on Wednesday, August 19th, 2026, price action broke above the neckline, reaching highs near 1.1710. A throwback to the neckline extension took place on August 28th, 2026, with price action finding support near 1.1580 before rising back toward 1.1620 in early September 2026.
• Currently, price is holding above a critical confluence of support, as indicated by multiple technical indicators converging near the same level. The range within 1.1600 - 1.1620 includes the intersection of the EMA9, SMA9, and SMA21 with the weekly PP of 1.1607 and the monthly PP of 1.1609. Further support and resistance levels are marked on the chart, weekly in red and monthly in blue.
• The range between the monthly R1 of 1.1719 and the weekly R3 of 1.1722 represents a confluence of resistance above price action.
• The Stochastics indicator is in line with price action, with the %K and %D lines finding support above their lower band of 20, where the two lines are currently coiled. The %K line is currently attempting to cross above the %D line.
• RSI remains in line with price action, rising after reaching its neutral 50 level.

EUR/USD is currently positioned above the 1.1600–1.1620 support confluence, which aligns with the 9 EMA, 21 SMA, weekly pivot point (1.1607), and monthly pivot point (1.1609). Recent macro data show US PPI rolling over to 4.689% YoY¹, while Eurozone HICP sits at 3.30% YoY, with a 2.40% YoY core HICP rate⁴, ahead of the ECB rate decision and the US CPI release. Technical indicators highlight overhead confluence resistance at 1.1719–1.1722 (monthly R1 / weekly R3), with the RSI positioned above 50 and Stochastic %K and %D lines coiling above the 20 level.

^{1 https://www.bls.gov/opub/ted/2026/final-demand-producer-prices-up-4-7-percent-over-year-ended-july-2026.htm}

^{2 https://www.bloomberg.com/markets/economic-calendar}

^{3 https://ecb-watch.eu/}

^{4 https://ec.europa.eu/eurostat/web/products-euro-indicators/w/2-01092026-ap}