EUR/USD gains as market focus fixes on the Fed

The EUR/USD pair opened the week on a positive note, rising to 1.1653. The move was fuelled by mounting expectations for a Federal Reserve rate cut this Wednesday, which continues to weigh on the US dollar. Markets are currently pricing in an 88% probability of a 25-basis-point reduction, a significant increase from the 67% odds seen just one month ago.

However, uncertainty clouds the policy path beyond this week. A "hawkish cut" scenario also remains plausible, where Chair Jerome Powell could deliver the expected easing while simultaneously signalling a more cautious, data-dependent approach for 2026.

The data calendar will add to the volatility, starting with the delayed JOLTS job openings report for October, due Tuesday. This release will provide a crucial update on labour market tightness, including hiring, layoffs, and quit rates

Globally, monetary policy decisions from the central banks of Australia, Brazil, Canada, and Switzerland will also be in focus this week, with all four expected to hold their benchmark rates steady.

Technical analysis: EUR/USD

Four-hour chart

On the H4 chart, EUR/USD maintains a clear upward bias, trading just below a key resistance level at 1.1682. The pair's position above the middle Bollinger Band confirms the dominance of buyers. The gradual expansion of the upper band indicates rising volatility and suggests the market is preparing for a potential breakout attempt.

A decisive close above 1.1682 would be a significant bullish signal, opening the path towards the next major resistance zone of 1.1770–1.1780. Conversely, should a pullback occur, the nearest notable support is at 1.1547. A break below this level would signal a deeper corrective move towards the lower Bollinger Band.

One-hour chart

On the H1 chart, the pair is consolidating after a strong impulse that tested the 1.1680 resistance. It is currently holding above a key local support level at 1.1635, from which the most recent recovery originated.

The Stochastic oscillator is in overbought territory, increasing the likelihood of a near-term pause or shallow pullback. Despite this, the broader H1 structure remains moderately bullish, with the price trading above the middle Bollinger Band and its lower band providing dynamic support.

A sustained breakout above 1.1680 would confirm a continuation of the uptrend, targeting 1.1720 and potentially 1.1750. On the downside, a failure to hold 1.1635 would be the first sign of weakening momentum, potentially triggering a correction towards the next demand zone at 1.1600–1.1580.

Conclusion

EUR/USD is trading with a firm bid ahead of a pivotal Fed meeting. While the expectation of a rate cut is providing near-term support, the central bank's forward guidance will be critical in determining the sustainability of the rally. Technically, the pair is at an inflection point, with a break above 1.1680/82 needed to unlock the next leg higher, while a hold below 1.1635 would suggest a period of consolidation or correction is due.