The EUR/USD pair showed slightly higher volatility on Thursday than traders had grown used to recently, but it was still not high. The market's reaction to the European Central Bank meeting was muted, as we warned yesterday. The ECB's decision was known to the market weeks in advance, so there was no real surprise. Compare the debates over the next Federal Reserve meeting with expectations for the ECB meeting — the latter was clear from the start. Thus, although we did not see a confident euro rally in recent weeks, one can say the market had already priced ECB tightening in — or at least ignored it.

When the market prices an event in advance, this is usually visible on charts and in price action. If traders were pricing Fed tightening and the dollar is rising out of the blue a week or two before the relevant decision is announced, there is no doubt the market started pricing it in. In our case, the European currency showed almost no growth, and on Thursday the market largely ignored the ECB outcome. So we conclude that traders are not paying attention to the ECB and are focused only on the Fed's policy.

If that is true, only one conclusion remains — one we have made before. Right now traders focus almost exclusively on Fed policy. The market has ignored a full-blown trade war between Canada and the US and has ignored the ECB raising key rates twice in 2026. The market is waiting for Fed tightening, and nothing will dissuade it — except the Fed itself.

So we must now wait for the Fed meeting, which may deliver surprises. If the Fed leaves rates unchanged, the market's expectation of tightening will prove unwarranted and bought the dollar. In this case, the US currency will begin a natural decline. If the Fed raises rates, the market has already priced it in. In this case, the dollar will fall.

In practice, the logic will be more complex, and even with Fed tightening, we would not necessarily expect a long-lasting dollar advance. Today's US CPI report will give traders a clue about the Fed's likely path; only a hot August inflation print will materially support the dollar. Meanwhile, from a technical standpoint, the euro has been in a correction since August 21, and that correction continues.

Average volatility of EUR/USD over the last 5 trading days as of September 11 is 38 pips — "low." We expect the pair to trade between 1.1584 and 1.1660 on Friday. The major linear-regression channel points up, indicating an uptrend. The CCI entered oversold territory, warning of a possible end to the correction.

Nearest support levels:

S1 – 1.1597

S2 – 1.1536

S3 – 1.1475

Nearest resistance levels:

R1 – 1.1658

R2 – 1.1719

R3 – 1.1780

Trading recommendations:

EUR/USD continues an uptrend on the 4-hour timeframe, which may be the start of a new leg of a global uptrend on higher timeframes. The global fundamental backdrop for the dollar remains negative overall. However, in 2026, geopolitics and the Fed's hawkish tilt provided strong support for the US currency—factors that no longer support the dollar. If price is below the moving average, consider short positions on corrective grounds with targets at 1.1597 and 1.1584. If price is above the moving average, long positions remain relevant with targets at 1.1658 and 1.1660.

Explanations for Illustrations:

Regression channels help determine the current trend. If both are directed in the same direction, it means the trend is currently strong;

The moving average line (settings 20,0, smoothed) defines the short-term trend and the direction in which trading should be conducted at present;

Murray levels are target levels for moves and corrections;

Volatility levels (red lines) are the probable price channel within which the pair will spend the next 24 hours based on current volatility indicators;

The CCI indicator – its entry into the oversold area (below -250) or the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.