EUR/USD Price Forecast: The 200-day SMA holds the downside for now
- EUR/USD regains balance and challenges the 1.1700 barrier post-Fed.
- The US Dollar comes under fresh pressure following the FOMC event.
- As expected, the Federal Reserve lowered its interest rates by 25 basis points.
EUR/USD manages to pick up some fresh and robust buying interest on Wednesday, advancing to the boundaries of 1.1700 the figure on the back of the resurgence of a marked downside momentum in the US Dollar (USD).
Indeed, the Greenback faces an extra selling mood after the Federal Reserve (Fed) trimmed its interest rates by 25 basis points, as widely anticipated. The move lower in the buck comes in tandem with a widespread correction in US Treasury yields following their recent firm rebound.
The pair’s uptick comes as the US Dollar Index (DXY) eases further, breaking well below its 99.00 support once again and reaching multi-month troughs.
What the Fed really signalled
The Fed delivered another rate cut on Wednesday, but the message around it arguably mattered more than the move itself. The split vote and Powell’s careful tone suggested officials are in no hurry to push borrowing costs lower again. Instead, they want a bit more clarity on a labour market that’s clearly cooling and on inflation that, as Powell put it, “remains somewhat elevated.”
The new projections largely stick to the script. Policymakers still see just one more 25 basis point cut in 2026, exactly where things stood in September. They expect inflation to drift down towards 2.4% by the end of next year, even as growth holds up nicely at around 2.3% and unemployment settles at a moderate 4.4%.
During his press conference, Chair Jerome Powell stressed that the Fed feels well placed to respond to whatever comes next, but he wasn’t about to hint at another imminent cut.
He also shut down the idea of a rate hike; it simply doesn’t feature in policymakers’ baseline view.
And when talking about inflation, Powell pointed to President Donald Trump’s import tariffs as the main reason price growth is overshooting the Fed’s 2% target right now.
ECB mood: steady hands for now
Over in Europe, the European Central Bank (ECB) is firmly in “wait and see” mode. It left rates at 2.00% for a third straight meeting on 30 October, signalling that — after 200 basis points of cuts this year. there’s little urgency to adjust policy again.
Inflation is settling, growth is roughly where policymakers expected, and for now there’s no need to rock the boat.
President Christine Lagarde said some global risks have eased, including tensions around US–China relations, although the broader picture remains uncertain.
The latest ECB Accounts showed similar thinking inside the Governing Council: the consensus is simply to hold steady for the time being.
Markets are singing from the same hymn sheet, with traders largely assuming the ECB will stay put on 18 December.
Tech corner
EUR/USD could regain more convincing upside traction once it clears the area of monthly highs around 1.1700, while its key 200-day SMA near 1.1480 continues to hold occasional sell-offs.
That said, a break above the December top of 1.1699 (December 10) could put a test of the weekly high at 1.1728 (October 17) back on the radar, ahead of the October ceiling at 1.1778 (October 1).
On the flip side, there is a minor support at the weekly trough at 1.1615 (December 9). The loss of this level should prompt spot to attempt a test of another weekly low at 1.1491 (November 21), just ahead of the key 200-day SMA at 1.1476. Down from here sits the November base at 1.1468 (November 5), prior to the August bottom at 1.1391 (August 1) and the weekly low at 1.1210 (May 29).
In addition, momentum indicators appear mixed: The Relative Strength Index (RSI) bounces to nearly 64, leaving the door open to extra gains, while the Average Directional Index (ADX) above 15 points to a trend that remains colourless.
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The broader take: constructive, but hardly thrilling
Overall, EUR/USD still has an upward tilt, but conviction is thin. Until the Fed offers clearer guidance on how far it plans to ease, or the Eurozone shows stronger signs of life, any rallies are likely to be contained.
For now, the pair is mostly reacting to US data and policy headlines rather than generating its own direction.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Author
Pablo Piovano
FXStreet
Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.
