EURUSD Under Pressure As ECB Tightening Expectations Fade

September Hike in DoubtEUR has come under heavy selling pressure on the back of yesterday’s ECB meeting. While the central bank hiked rates by a further .25% as expected, the tone of the meeting was far less hawkish than many were expecting. Lagarde seemed to downplay the likelihood of a further hike in September, citing weakness in the eurozone economy in her guidance that all options were on the table in September, including a pause. Lagarde noted that the September meeting will be “deliberately data dependent”, with the statement no longer referring to the need to do more.Autopilot Switched OffThe takeaway from the meeting is that the ECB is no longer in auto-pilot mode with rates and as such, the market is now eyeing the potential for the bank to pause tightening altogether. With key eurozone indicators trending lower, the market is undergoing a dovish repricing for eurozone rates and will be closely watching incoming data ahead of the September meeting. If data continues to highlight weakness this should keep EUR pressured as traders scale back ECB tightening expectations near-term.Technical ViewsEURUSDThe reversal has seen the pair trading heavily back under the 1.1126 level. Price is now fast approaching a test of the rising trend line from last year’s lows, ahead of deeper support at the 1.0785 level. This will be a key area to monitor with a break lower there opening the way for a much deeper push.