EUR/USD Price Forecast: 1.1500 to remain key support level for Fed’s Day

EUR/USD trades cautiously at around 1.1545 ahead of the Fed’s policy decision.
The Fed is almost certain to hike interest rates by 25 bps to the 3.75%-4.00% range.
Market experts see the Fed delivering one more interest rate hike this year.

Sagar Dua FXStreet

The Euro (EUR) trades with caution at around 1.1545 against the US Dollar (USD) during the early European trading session on Wednesday. The major currency pair is expected to remain under pressure as the Federal Reserve (Fed) is scheduled to announce the monetary policy decision at 18:00 GMT.

The Fed is widely anticipated to break its five-meeting hold streak and hike interest rates by 25 basis points (bps) to the 3.75%-4.00% range, as latest Consumer Price Index (CPI) report showed that inflationary pressures are sticky and well above the central bank’s 2% target.

Investors will pay close attention to Fed’s monetary policy statement and Chairman Kevin Warsh’s press conference to get fresh cues regarding the US interest rate outlook.

Ahead of the Fed meeting, financial markets have started pricing in at least one more interest rate hike this year.

ABN Amro frames hike as inflation insurance, not the start of a long cycle

Analysts at ABN Amro stress that, in their view, the rationale for another move is primarily precautionary rather than aggressively disinflationary. They argue that “the case for a hike is therefore less about bringing inflation down directly and more about preventing inflation from becoming more persistent.” Reflecting this risk-management stance, the bank says it has “pencilled in a single additional hike in the December meeting, based on similar considerations as the first hike,” while underscoring that the path beyond that will hinge on how inflation dynamics evolve.

EUR/USD Technical Analysis

EUR/USD trades at 1.1548, keeping a mildly bearish near-term tone as it holds beneath the 20-day exponential moving average (EMA) at 1.1590.

The failure to reclaim this dynamic barrier hints that recent rebounds are being sold into, while the Relative Strength Index (RSI) around 43 sits in neutral-to-soft territory, suggesting downside pressure persists but without oversold extremes.

Strategists at Scotiabank also see the current setup as “neutral/bearish” with the “RSI has swiftly fallen into bearish territory following a brief push above the overbought threshold at 70—reached in late August.”

On the topside, initial resistance is defined by the 20-day EMA at 1.1590, and a daily close above this level would be needed to ease the current downside bias and open the door to a more sustained recovery. Looking down, the psychologcial level of 1.1500 is the key support zone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Economic Indicator

Fed Interest Rate Decision

The Federal Reserve (Fed) deliberates on monetary policy and makes a decision on interest rates at eight pre-scheduled meetings per year. It has two mandates: to keep inflation at 2%, and to maintain full employment. Its main tool for achieving this is by setting interest rates – both at which it lends to banks and banks lend to each other. If it decides to hike rates, the US Dollar (USD) tends to strengthen as it attracts more foreign capital inflows. If it cuts rates, it tends to weaken the USD as capital drains out to countries offering higher returns. If rates are left unchanged, attention turns to the tone of the Federal Open Market Committee (FOMC) statement, and whether it is hawkish (expectant of higher future interest rates), or dovish (expectant of lower future rates).

AUD/USD hangs close to monthly lows, still defends 0.7100 ahead of Fed decision

AUD/USD retains its negative bias for the third straight day, defending 0.7100 while trading close to a monthly low in Wednesday's Asian session on Wednesday. The US Dollar stands firm near a two-week high as the anticipated Fed rate hike and oil-driven inflation fears continue to push US bond yields to a multi-year high. Furthermore, escalating Middle East tensions benefit the safe-haven buck and weigh on the risk-sensitive Aussie.

USD/JPY holds firm above 155.00, awaits Fed policy announcements

USD/JPY climbs to a fresh one-week high above 155.00 in the Asian session on Wednesday amid a bullish US Dollar. Oil-driven inflation fears, along with the anticipated Fed rate hike, continue to support surging US bond yields. Moreover, rising US-Iran tensions underpin the USD's reserve currency status. The pair, however, remains below the mid-155.00s as bulls seem hesitant ahead of the Fed decision later today and the BoJ meeting, starting on Thursday.

Gold clings to recovery gains above $4,300, awaits Fed

Gold struggles to capitalize on its modest intraday move higher and remains below the $4,350 level in European trading on Wednesday. The US Dollar pauses for a breather after touching a two-week high and offers some support to the commodity. Traders, however, seem hesitant to place aggressive directional bets and opt to wait on the sidelines heading into the key Fed event risk.

Bitcoin, Ethereum, and Ripple retreat as Fed rate decision looms

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) remain under pressure and consolidate at the time of writing on Wednesday after falling more than 3%, 4% and 9%, respectively, as the Clarity Act failed to advance in the Senate on Tuesday.

Fed decision in focus

Starting with the most important, the Fed decision. Heading into the event, data showed a rather punchy US August jobs report, which, you will likely recall, triggered a hawkish Fed rate repricing in rates markets. However, the recent US August CPI print mattered more.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.