EUR/USD hits four-year high: All eyes on the Fed

RoboForex Analysis Department RoboForex

The EUR/USD pair surged to 1.1854 USD on Wednesday, reaching its highest level since September 2021. Investors are positioning ahead of the Federal Reserve’s highly anticipated interest rate decision, due later today.

Markets are almost fully pricing in a 25-basis-point cut, with 67 basis points of cumulative easing expected by year-end. These expectations are reinforced by recent labour market softening, despite inflation remaining above the Fed’s 2% target.

Significant attention will also be focused on the updated quarterly dot plot, which may offer critical insights into the future path of monetary policy.

The trading session is expected to be highly volatile.

On the data front, US retail sales rose in August for the third consecutive month, underscoring the resilience of consumer spending over the summer.

Broad-based USD weakness has driven the dollar lower against nearly all major currencies.

Technical analysis: EUR/USD

Four-hour chart

On the H4 chart, EUR/USD formed a consolidation range around 1.1762 USD before breaking upward to complete an impulsive move to 1.1877 USD. The pair now appears poised for a corrective decline towards 1.1762 USD. This outlook is supported by the MACD indicator: although the signal line remains above zero, it has reached overextended levels. This suggests that a near-term pullback is likely.

One-hour chart

On the H1 chart, the pair completed its ascent to 1.1877 USD and is now forming a consolidation range below this level. A downward breakout is expected, with an initial decline towards 1.1762 USD likely. A brief rebound towards 1.1820 USD may follow. Selling pressure could then resume, with targets at 1.1630 USD and potentially 1.1550 USD. The Stochastic oscillator confirms this bearish near-term bias, with its signal line positioned below 50 and trending downward towards 20.

Conclusion

The euro’s rally to multi-year highs reflects broad USD weakness and elevated expectations for Fed easing. However, technical indicators suggest the pair is overextended and due for a correction. Today’s Fed decision – particularly the tone of the statement and updated dot plot – will be crucial in determining whether this pullback deepens or becomes a buying opportunity. Traders should prepare for significant volatility following the release.

Author

RoboForex Analysis Department

RoboForex

RoboForex Analysis Department provides timely market insights, expert technical analysis, and actionable forecasts across forex, commodities, indices, and equities.

EUR/USD recedes to daily lows near 1.1850

EUR/USD keeps its bearish momentum well in place, slipping back to the area of 1.1850 to hit daily lows on Monday. The pair’s continuation of the leg lower comes amid decent gains in the US Dollar in a context of scarce volatility and thin trade conditions due to the inactivity in the US markets.

GBP/USD resumes the downtrend, back to the low-1.3600s

GBP/USD rapidly leaves behind Friday’s decent advance, refocusing on the downside and retreating to the 1.3630 region at the beginning of the week. In the meantime, the British Pound is expected to remain under the microscope ahead of the release of the key UK labour market report on Tuesday.

Gold looks inconclusive around $5,000

Gold partially fades Friday’s strong recovery, orbiting around the key $5,000 region per troy ounce in a context of humble gains in the Greenback on Monday. Additing to the vacillating mood, trade conditions remain thin amid the observance of the Presidents Day holiday in the US.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.