EUR/USD: Likely to consolidate on the day - OCBC

Euro (EUR) traded subdued in absence of fresh catalyst. CPI picked up to 2.2% y/y but well within consensus. Pair was last at 1.1752 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Broader fundamental outlook remains supportive

"Earlier comments from ECB officials may have tempered expectations. Lagarde said the inflation risks are quite contained in both directions. She also indicated that we are in a good place but that place is not fixed. Our house view believes that ECB rate cut cycle is nearing its end."

"Mild bearish momentum on daily chart shows tentative signs of fading while RSI was flat. 2-way trades still likely, within recent range. Immediate resistance here at 1.1810 and 1,1920 levels (2025 high). Support at 1.1640/70 levels (50 DMA, 23.6% fibo retracement of Mar low to Sep high), 1.16 (100 DMA) and 1.1460 (38.2% fibo)."

"New French PM Sebastien Lecornu has ruled out wealth tax, aims to cut budget deficit to 4.7% of GDP in attempt to get budget 2026 by early Oct. It remains early to concur if he can turn things, but early polls show he only has a positive opinion of 16%. Additionally, the Netherlands will hold General Elections on October 29. These political developments may still pose short-term downward risk on the euro. However, the broader fundamental outlook remains supportive of the euro, suggesting a buy-on-dips approach.