EUR/USD Clings to Key Support Ahead of Fed Decision
EUR/USD is holding its breath at a significant support level as the Federal Reserve gears up for tomorrow’s interest rate decision. The market is balancing what feels like a finely poised mix: sticky inflation, resilient US economic data, and the risk of overly aggressive policy easing. In short, the market is jittery, and EUR/USD is reflecting that perfectly.
The Technical Picture
Let’s take a step back. After the steady decline through the second half of the year, EUR/USD has spent the past month consolidating near the October 2023 lows. This long-term support level has held firm so far, but the price action is far from convincing.
We’ve already seen two false breakouts recently. At the end of November, there was a fake dip below support, quickly followed by an equally fleeting move above the range earlier this month. These two extremes set the boundaries of the current consolidation phase and tell us one thing—EUR/USD is coiling up, and something’s got to give.
Adding to the tension, the top of the recent range now lines up with the descending trendline that’s defined the pair’s medium-term downtrend. This confluence of technical factors puts EUR/USD in a tight corner just as the Fed is about to weigh in.
EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
Zoomed View: EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
Scenarios to Watch
1. Dovish Cut – The Fed Eases Off the Brakes
If Powell and the team deliver a quarter-point cut and hint at a more accommodative stance next year, EUR/USD could finally catch a bid. A clean break above the descending trendline and recent range highs would signal a shift in momentum, with the 200 day moving average quickly coming into focus as the next area of interest.
2. As-Expected but Cautious – Status Quo for Now
The more likely scenario is a measured quarter-point cut paired with Powell keeping his cards close to his chest. If the Fed reiterates a gradual approach and avoids overpromising future cuts, EUR/USD could stay stuck in its current range. In this case, the October lows remain the line in the sand, with the pair trudging sideways until there’s more clarity.
3. Hawkish Tilt – The Fed Pushes Back
If Powell leans more hawkish—acknowledging the resilience of the US economy and refusing to commit to further easing—EUR/USD could crack. A decisive break below the October lows would clear the way for a fresh leg lower.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
The Technical Picture
Let’s take a step back. After the steady decline through the second half of the year, EUR/USD has spent the past month consolidating near the October 2023 lows. This long-term support level has held firm so far, but the price action is far from convincing.
We’ve already seen two false breakouts recently. At the end of November, there was a fake dip below support, quickly followed by an equally fleeting move above the range earlier this month. These two extremes set the boundaries of the current consolidation phase and tell us one thing—EUR/USD is coiling up, and something’s got to give.
Adding to the tension, the top of the recent range now lines up with the descending trendline that’s defined the pair’s medium-term downtrend. This confluence of technical factors puts EUR/USD in a tight corner just as the Fed is about to weigh in.
EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
Zoomed View: EUR/USD Daily Candle Chart
Past performance is not a reliable indicator of future results
Scenarios to Watch
1. Dovish Cut – The Fed Eases Off the Brakes
If Powell and the team deliver a quarter-point cut and hint at a more accommodative stance next year, EUR/USD could finally catch a bid. A clean break above the descending trendline and recent range highs would signal a shift in momentum, with the 200 day moving average quickly coming into focus as the next area of interest.
2. As-Expected but Cautious – Status Quo for Now
The more likely scenario is a measured quarter-point cut paired with Powell keeping his cards close to his chest. If the Fed reiterates a gradual approach and avoids overpromising future cuts, EUR/USD could stay stuck in its current range. In this case, the October lows remain the line in the sand, with the pair trudging sideways until there’s more clarity.
3. Hawkish Tilt – The Fed Pushes Back
If Powell leans more hawkish—acknowledging the resilience of the US economy and refusing to commit to further easing—EUR/USD could crack. A decisive break below the October lows would clear the way for a fresh leg lower.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 82.67% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.
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