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EUR/USD Forecast: Sellers take action after FOMC Minutes

  • EUR/USD declines toward 1.1500 after posting large losses on Wednesday.
  • The US Dollar gathers strength on FOMC Minutes' hawkish tone.
  • The technical outlook highlights a bearish stance in the near term.

EUR/USD came under heavy selling pressure in the late American session on Wednesday and lost about 0.4% on the day. The pair stays on the back foot in the European morning on Thursday and edges lower toward 1.1500.

Euro Price This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.90%0.71%1.87%0.25%0.95%1.30%1.51%
EUR-0.90%-0.08%1.32%-0.63%0.04%0.41%0.62%
GBP-0.71%0.08%1.17%-0.55%0.13%0.49%0.70%
JPY-1.87%-1.32%-1.17%-1.57%-0.88%-0.55%-0.38%
CAD-0.25%0.63%0.55%1.57%0.71%1.05%1.25%
AUD-0.95%-0.04%-0.13%0.88%-0.71%0.37%0.58%
NZD-1.30%-0.41%-0.49%0.55%-1.05%-0.37%0.21%
CHF-1.51%-0.62%-0.70%0.38%-1.25%-0.58%-0.21%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

The US Dollar (USD) outperformed its rivals in the second half of the day on Wednesday and forced EUR/USD to turn south. The Federal Reserve's (Fed) minutes of the October policy meeting showed that many policymakers thought that, under their outlooks, it would be appropriate to keep rates unchanged for the rest of the year. "Most participants noted further rate cuts could add to the risk of higher inflation becoming entrenched or could be misinterpreted as a lack of commitment to the 2% inflation objective," the publication read.

According to the CME FedWatch Tool, the probability of a 25 basis points (bps) interest rate cut in December dropped to 30% from about 50% before the release of the FOMC Minutes.

Later in the American session, the US Bureau of Labor Statistics will publish the employment report for September. Investors expect Nonfarm Payrolls to rise by 50,000. Since this report will cover the period before the US government shutdown, it is unlikely to trigger a significant market reaction.

Meanwhile, US stock index futures trade in positive territory after the upbeat earnings report from Nvidia attracted risk flows. In case Wall Street's main indexes rally after the opening bell, the USD could find it difficult to continue to gather strength and help EUR/USD find support.

Chart Analysis EUR/USD

EUR/USD Technical Analysis:

The Simple Moving Averages (SMA) slope downward overall, and price holds beneath the 20-, 50-, 100- and 200-period SMAs on the 4-hour chart, maintaining a bearish bias. The Relative Strength Index (RSI) sits at 31, near the oversold band, but reaffirming the bearish stance.

Measured from the 1.1885 high to the 1.1470 low, the 23.6% retracement at 1.1568 acts as resistance, ahead of 1.1595 (200-period SMA) and the 38.2% retracement at 1.1628. Failure to reclaim 1.1568 could keep sellers interested and leave the door open for an extended slide toward 1.1470 (end-point of the downtrend), 1.1450 (static level) and 1.1400 (static level).

(The technical analysis of this story was written with the help of an AI tool)

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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