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  • Investors are expecting a 50bps hike in the next Fed meeting.
  • Daly believes the upcoming economic data might call for a 75bps hike.
  • She believes that rates should go up to 3.4% this year.

The EUR/USD price analysis suggests bearish momentum as the price turns back below 1.0300 amid Fed’s rate hike speculation.

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President of the San Francisco Federal Reserve Bank Mary Daly stated on Thursday that while a half-point increase in interest rates in September “makes sense,” she is open to the prospect of a more significant increase to combat excessive inflation.

“I still think 50 basis points is the case, but I am open to 75 should the data evolve differently,” Daly told Bloomberg TV. Noting that further employment and inflation data will be available before the Fed’s meeting on September 20-21, she cautioned against being “head-faked” by the recent improvement in inflation readings.

Daly’s hawkish stance came the day after a Labor Department report revealed that consumer prices did not increase in July relative to the previous month. The day after, a report revealed that producer prices unexpectedly dropped in July.

Interest-rate futures traders increased their wagers on a rate increase of 50 basis points that Daly believes is most likely at the upcoming Fed meeting. It is supported by the glint of reprieve from the inflation that had been steadily increasing.

She reiterated that rates need to climb to approximately 3.4% this year and higher next year to restrain growth and lower inflation. Since March, the Fed has lifted its short-term policy rate from zero to a current range of 2.25%-2.5%.

EUR/USD key events today

Investors expect the Eurozone Industrial Production value, which quantifies the change in the total value of the output produced by factories, mines, and utilities after accounting for inflation.

From the United States, there will be the Michigan consumer sentiment and expectation reports.

EUR/USD technical analysis: Bulls rejected above 1.03500

EUR/USD price analysis

Looking at the 4-hour chart, the price failed to close above 1.03500 as the level offered solid resistance. The price is trading above the 30-SMA, a sign that bulls are in control. This control can also be seen in the RSI, which supports bullish momentum above 50.

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The price is retesting support at 1.02863, which might consolidate before the SMA catches up and break above 1.03500.

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