EUR/USD appears cautious near 1.0800 ahead of Fed event

EUR/USD alternates gains with losses in the sub-1.0800 region.
The Fed is likely to skip a rate hike at its meeting later on Wednesday.
Latest US inflation figures support the largely anticipated Fed pause.

Pablo Piovano FXStreet

In line with the broad-based consolidation theme in the FX universe, EUR/USD trades within a narrow range in the vicinity of the 1.0800 region ahead of the key FOMC event due later on Wednesday.

EUR/USD remains focused on the Fed gathering

EUR/USD has so far interrupted its weekly recovery and hovered around the 1.0800 zone on Wednesday in response to the generalized directionless mood in the global markets as investors await the interest rate decision by the Federal Reserve, which is expected later in the European evening.

While a pause in the Fed’s hiking cycle is largely telegraphed, another 25 bps rate raise by the ECB is also anticipated on Thursday. The Fed’s decision to reach an impasse in its tightening programme was further propped up by another decline in US inflation figures last month.

However, fast forwarding to July, both central banks are expected to hike interest rates by a quarter-point. In fact, according to the FedWatch Tool by CME Group, the probability of that scenario approaches 62% so far.

Data-wise, in the euro area, Industrial Production will be the sole release, while weekly Mortgage Applications are due across the pond.

What to look for around EUR

EUR/USD trades close to the 1.0800 region in response to the consolidative mood in the rest of the global assets in the pre-FOMC trade.

In the meantime, the pair’s price action is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting interest rates.

Moving forward, hawkish ECB speak continues to favour further rate hikes, although this view appears to be in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: EMU Industrial Production (Wednesday) – Eurogroup Meeting, EMU Balance of Trade, ECB Interest Rate Decision, ECB Lagarde (Thursday) – ECOFIN Meeting, Final EMU Inflation Rate (Friday).

Eminent issues on the back boiler: Continuation of the ECB hiking cycle in June and July (and September?). Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is losing 0.06% at 1.0786 and faces the next support at 1.0635 (monthly low May 31) seconded by 1.0516 (low March 15) and finally 1.0481 (2023 low January 6). On the other hand, the surpass of 1.0823 (monthly high June 13) would target 1.0877 (55-day SMA) en route to 1.0904 (weekly high May 16).

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.

AUD/USD remains above 0.7200 after China's trade data

AUD/USD sits above 0.7200 in the Asian session on Tuesday, near its highest level since May 14. The US Dollar stays under pressure as a rallying Japanese Yen outweighs support from hawkish Fed bets and geopolitical tensions. This, along with firming expectations for another RBA rate hike later this month, acts as a tailwind for the Aussie. However, mixed China trade balance data keep the pair restricted.

USD/JPY: Heavy near 153.50 as BoJ rate hike bets boost JPY

USD/JPY is sitting at six-month lows near 153.50 in the Asian session on Tuesday, as Japan's upbeat wage growth data and Q2 GDP revision cement bets on a BoJ rate hike next week and continue to boost the Japanese Yen. Meanwhile, US Dollar selling remains unabated despite hawkish Fed expectations and rising geopolitical tensions, lending additional support to the pair.

Gold benefits from weak USD; eyes $4,450 as focus remains on US CPI data

Gold attracts some buyers during the Asian session, snapping a two-day losing streak as the recent US Dollar pullback from a three-week high gains momentum amid the rallying Japanese Yen. However, hawkish US Federal Reserve expectations, along with persistent geopolitical uncertainties, offer some support to the safe-haven buck and cap the non-yielding bullion.

Ripple and Stellar outlook: Hold bullish bias above EMAs as derivatives back upside

Ripple (XRP) and Stellar (XLM) hold above the key support zones on Tuesday, hinting at an upside move. Derivatives metrics further support the recovery, with both altcoins showing positive funding rates and rising long positions. Derivatives data shows a bullish tilt among XRP and XLM traders.

Europe in focus: September 2026

Six major net contributors demanded substantial cuts to the European Commission’s proposed 2028–2034 EU budget. Germany, Denmark, the Netherlands, Austria, Finland and Sweden issued a joint position on 27 August calling for the nearly €2 trillion proposal to be reduced by several hundred billion euros and rejecting additional common EU borrowing.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.