EUR/USD steeply off the highs, breaks into six-month lows under 1.0635

• Euro on pace for its worst trading day since July.
• Dovish ECB signals potential end of rate hike cycle.
• EUR/USD set to close in the red for the ninth consecutive week.

The EUR/USD continues to tumble through the US trading session for Thursday, clipping into the sub-1.0640 region as Euro bulls evaporate into the aether. The Euro (EUR) is at its lowest price against the Greenback (USD) in six months.

Euro tumbles as ECB achieves a dovish rate hike

The Euro is floundering after the European Central Bank (ECB) signaled the end of the rate hike cycle after delivering one last 25-basis-point rate increase, with the ECB’s President Christine Lagarde hinting that there might be no further rate hikes in the pipe as the European Union (EU) looks to keep its economy on-balance.

ECB President Lagarde noted that the broad European economy is likely to see soft spots heading into 2024, specifically highlighting weakness in the services sector. 

Market bets of another rate hike from the ECB have entirely collapsed, and investors have begun to anticipate the first rate cut from the ECB next March.

Further reading: ECB raises interest rates again, signals end of tightening cycle

See more: Lagarde can’t say ECB rates have reached their peak

EUR/USD technical outlook

With the Euro continuing to slide into fresh six-month lows, the EUR/USD is set to accelerate into a steepening bearish trend if buyers aren’t able to stage a relief rally from here.

The 100-day Simple Moving Average has begun to turn bearish into the 1.0900 handle, and the 50-day SMA has begun to turn lower but still remains in a bullish cross against the longer SMA. Sellers will be looking for the bearish cross of the 50- and 100-day SMAs to accelerate declines, while bulls will be looking to arrest the declines before the cross confirms.

If the backslide continues uninterrupted, the next meaningful support zone will be 2023’s bottoms near 1.0550, set back in March of this year.

EUR/USD daily chart