The Euro (EUR) snapped a five-day winning streak against the US Dollar (USD) on Wednesday, retreating to 1.1630 from highs around 1.1670. The pair trades near 1.1640 at the time of writing, with downside attempts contained above the 1.1615 support zone as investors turn cautious ahead of the Federal Reserve’s interest rate decision later today.
Market Sentiment: Traders Defensive Ahead of Fed
The US Dollar is showing modest strength as traders pare back short positions before the Fed’s policy announcement at 18:00 GMT. Markets widely expect the Federal Reserve to cut its benchmark rate by 25 basis points to a 3.75%–4.00% range, while attention will turn to Chair Jerome Powell’s press conference for guidance on whether another rate cut could follow in December.
Futures markets currently price in a 91% probability of an additional rate cut before year-end.
Investors are also eyeing whether the Fed will hint at ending its balance sheet reduction program (Quantitative Tightening) amid signs of tightening credit conditions in the U.S. banking system.
Global Developments: Trade and Eurozone Data
Meanwhile, U.S. President Donald Trump continues his Asia tour, signing a rare earths trade deal with Japan before heading to South Korea for a meeting with Chinese President Xi Jinping. Markets are hopeful the two leaders will outline a framework to extend the U.S.–China trade truce.
In the Eurozone, data showed Spain’s Q3 GDP growth slowed slightly to 0.6% quarter-on-quarter, down from 0.7% previously and below expectations. Annual growth held steady at 2.8%, while retail sales in September eased to 4.2% from 4.5% in August — both indicators adding mild downward pressure on the Euro.
Currency Heat Map: Euro Leads Against the Pound
| Base/Quote | USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF |
|---|---|---|---|---|---|---|---|---|
| USD | — | 0.09% | 0.39% | 0.06% | -0.03% | -0.22% | -0.01% | 0.34% |
| EUR | -0.09% | — | 0.31% | -0.02% | -0.08% | -0.30% | -0.09% | 0.26% |
| GBP | -0.39% | -0.31% | — | -0.32% | -0.42% | -0.61% | -0.43% | -0.06% |
The Euro remains strongest against the British Pound, while the USD holds firm ahead of the Fed meeting.
Technical Outlook: Neutral Bias Near 1.1640
The EUR/USD recovery has stalled near 1.1670, with momentum indicators softening. The 4-hour RSI is hovering around the 50.0 level, and the MACD is crossing below its signal line, suggesting waning bullish momentum.
- Support: 1.1615 (October 27 low/trendline support). A break below this level could open the door to 1.1576, followed by 1.1545.
- Resistance: 1.1670 (Tuesday high). A sustained move above this could target 1.1730 (October 17 high) and 1.1780 (October 1 high).
Looking Ahead
The Federal Reserve’s rate decision and Powell’s remarks will be key for short-term direction. The European Central Bank (ECB) meets Thursday and is expected to keep its Deposit Facility Rate unchanged at 2%, with focus on whether it signals an end to its tightening cycle.
