EUR/USD Price Forecast: Speculative interest pauses ahead of Fed’s announcement

EUR/USD Current price: 1.1633

• The Federal Open Market Committee is set to announce its monetary policy decision.
• The United States government shutdown continues, messing up with official data releases.
• EUR/USD trades neutral in the near term, selling interest seems limited.

The EUR/USD pair trades with a modest bearish bias on Wednesday, hovering around the 1.1630 level early in the American session. There’s little going on around financial markets ahead of central banks’ monetary policy decisions, starting with the Bank of Canada (BoC) and the Federal Reserve (Fed). The latter, of course, is grabbing most of the attention, as United States (US) policymakers are widely anticipated to cut the benchmark interest rate for the second time this year, by 25 basis points (bps).

However, it is not about the interest rate cut. The decision comes with the federal government on pause amid a lack of funding. That means officials will announce their decision with pretty much no data behind it. The Bureau of Labor Statistics (BLS) released September Consumer Price Index (CPI) figures, but for roughly a month, no official employment-related data has been out. Even further, the Fed’s favorite inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, should be out this week, but it won’t happen with the government shutdown. The same goes for Q3 Gross Domestic Product (GDP).

In such a scenario, there is a minimal chance that Federal Open Market Committee (FOMC) officials would opt for an on-hold stance, which will send all hell breaking loose. Officials know this, and this decision could be backed by this thinking rather than anything else. They may choose not to say it, but the market would know.

As previously noted, a 25 bps trim to the benchmark rate has long been priced in. The focus will be on whatever Chair Jerome Powell has to say in the press conference and any hints he may give on future decisions.

EUR/USD short-term technical outlook

On the 4-hour chart, EUR/USD is trading around 1.1630, down for the day. A mixed moving-average setup prevails: the pair is trapped between a bullish 20 SMA and a flat 100 SMA, with the 20 SMA standing at 1.1641, the 100 SMA at 1.1625, and the 200 SMA at 1.1688. Notably, the 100 and 200 SMAs continue to edge lower, underscoring a broader bearish backdrop even as the shorter average grinds higher. Immediate resistance is located at 1.1641 (20 SMA), followed by 1.1688 (200 SMA), while initial support aligns at 1.1625 (100 SMA). A sustained break back above 1.1641 would ease intraday pressure and expose the 1.1641–1.1688 cap, whereas a break below 1.1625 would put sellers back in control in line with the longer averages.

The Momentum indicator has turned marginally lower, signaling building bearish traction after failing to extend the latest recovery. In tandem, the RSI retreated back below its 50 mid-line to around 48, flagging fading bullish impetus. Taken together, oscillators lean in favor of a corrective pullback, with scope for further slippage while below 1.1641; only a firm recovery through that level would improve the near-term tone and allow a test of 1.1688.

In the daily chart, EUR/USD is tilted lower. The short-term 20 SMA has rolled over and is declining, capping the pair as it sits just above spot at 1.1641. Notably, it trades below the rising 100 SMA at 1.1666, which keeps the immediate bias heavy. This sets a resistance band at 1.1641-1.1666, while the longer-term backdrop remains underpinned by a steadily advancing 200 SMA at 1.1303, which acts as dynamic support.

Oscillators corroborate the cautious tone. The Momentum has slipped back into negative territory, while the RSI has rolled back below the 50 mid-line to 46.9, signaling a modest bearish bias. As long as EUR/USD remains capped by the 20 SMA at 1.1641 and the 100 SMA at 1.1666, downside risks persist; a sustained close above those hurdles would be needed to neutralize pressure, while the rising 200 SMA at 1.1303 continues to underpin the broader trend.

(This content was partially created with the help of an AI tool)