Forex · 23 September 2026
EUR/USD Tests July Lows as Fed Path Trumps ECB Tightening
The euro slides to **1.1447** after both central banks hiked, but dollar demand prevails ahead of next week's US payrolls data.
Ultimo Research
EUR/USD closed the day under pressure at 1.1447 on September 22, down 0.15% from the previous session and weakened 1.86% over the past month. The pair now trades at levels last seen in late July as higher oil prices weigh on sentiment while the US dollar remains supported by expectations of further Federal Reserve rate hikes. The Federal Reserve raised its benchmark interest rate by 25 basis points to a target range of 3.75%-4% on September 16, its first increase since 2023, while the ECB raised rates by 25 basis points to 2.50% on September 10. Both moves reflect central bank responses to the conflict in the Middle East continuing to generate inflation pressures.
The divergence in tone matters more than the parallel quarter-point steps. Updated Fed projections point to the possibility of another rate increase this year, with a median year-end projection of 4.1% consistent with a 4.00%-4.25% range—one additional 25 bp step. As of September 21, futures markets are pricing an increase to about 4.2% by December. Chair Kevin Warsh's hawkish Jackson Hole stance has reinforced dollar strength despite the ECB's own tightening bias. ECB staff projections see headline inflation averaging 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028, leaving the door open for further European hikes but not enough to offset the Fed's path.
What the calendar says
The next scheduled high-impact release is the US nonfarm payrolls report on Friday, October 2, 2026 at 12:30 UTC from the Bureau of Labor Statistics. The September 2026 employment data will be released at 8:30 AM Eastern Time on October 2. The August report delivered a surprise 162K jobs added, the most in five months, following an upwardly revised 23K rise in July and much higher than market expectations of 56K. A similarly strong September print would reinforce Fed tightening expectations and weigh further on EUR/USD, GBP/USD, gold and lift USD/JPY. Markets will parse the establishment survey payroll count alongside the unemployment rate and wage inflation figures for clues on whether the Fed delivers that second hike before year-end. Traders can track the full schedule on our economic calendar.
EUR/USD: the technical picture
The hourly chart shows EUR/USD in a pronounced downtrend from early September highs near 1.1650 to current levels around 1.1430-1.1450. The sharpest leg down occurred mid-month, coinciding with the Fed decision on September 16. The pair is testing an ascending trendline running around 1.1450-1.1470, and the technical advantage remains with sellers, but the 1.1450 area requires a confirmed break before new short positions are opened. Immediate resistance sits at 1.1470-1.1500, previously support before the breakdown. A consolidation below 1.1450 would confirm a break of the ascending trendline and create conditions for a continued decline towards the July lows. The in-house signal engine currently reads Strong Sell, aligning with the chart structure of lower highs and lower lows. Any recovery attempt faces a wall of supply into 1.1545, the pivot that separates correction from reversal in the current downtrend.
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