EUR/USD technical setup before the break

All eyes on the Fed

EUR/USD is currently trading within a range between 1.163 - 1.149 level. showing signs of indecision as traders await the FOMC rate decision.

The Federal Reserve’s interest rate decision will be a critical event for EUR/USD. While markets broadly expect the Fed to hold rates steady, the focus will be on:

• The tone of the policy statement.
• Any shift in the dot plot.
• Powell’s press conference language.

Last week’s soft U.S. CPI report renewed market speculation of rate cuts later this year. However, during the June 13 FOMC update, the Fed surprised traders by projecting only one cut in 2025 instead of the previously expected two. This hawkish stance caused short-term dollar strength, but traders remain skeptical.

Bullish scenario: Sweep – reclaim – expansion

If the Fed’s tone tomorrow is more dovish than expected, or if Powell leaves room for a cut in September, the dollar could weaken, pushing EUR/USD higher.

• 4-Hour FVG Holds 1.15443 - 1.15697.
• Break of Bearish 4-Hour FVG 1.15638 - 1.15783.
• EUR/USD trades above equilibrium of the range.
• Dovish Fed.

Targets:

• 1.1631 → breakout level.
• 1.1600 → psychological level.

Bearish scenario: FVG rejection – breakdown

If Powell doubles down on the “higher for longer” narrative or pushes back against market expectations for cuts, the dollar could gain, sending EUR/USD lower.

• Bearish 4-Hour FVG 1.15638 - 1.15783 Holds.
• Bullish 4-Hour FVG 1.15443 - 1.15697 Breaks.
• Equilibrium or 50% of the range holds and acts as a resistance.
• Hawkish Fed.

Targets:

• 1.1500 → psychological level.
• Neutral Bias Until FOMC Clarity.

Price is currently sandwiched between 1.163 - 1.149, a known liquidity trap. Institutions often let price hover in these zones until the catalyst hits. This range is engineered to trap early buyers and sellers. Do not chase either side until the market shows intent after the FOMC.