**BREAKING: EUR/USD Breaks Key Support as Inflation Softens, ECB Hike Doubts Mount**
The euro has breached critical support at 1.1400 against the US dollar following weaker-than-expected eurozone inflation data, according to MUFG analyst Lee Hardman. The breakdown comes as bond yields decline across the euro area and market participants increasingly price out further European Central Bank rate hikes ahead of Friday’s US Non-Farm Payrolls report.
MUFG highlights that the ECB’s previously discussed “milder” economic scenario now appears the most probable outcome, significantly reducing expectations for additional monetary tightening. This dovish repricing has accelerated selling pressure on the single currency at a critical technical juncture.
Currency traders are now watching whether EUR/USD can reclaim 1.1400 or if further downside toward 1.1300 develops, particularly if NFP data reinforces dollar strength. The shift in ECB policy expectations marks a notable reversal from earlier hawkish positioning that had supported the euro through much of the year.
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FXnCO Insight
** Traders should monitor 1.1400 as resistance with bearish euro positioning recommended on rallies until inflation data or ECB guidance materially shifts dovish expectations.
Source: FXStreet