The EUR/USD currency pair remained range-bound on Tuesday, holding near the 1.1300 level as traders await critical guidance from the U.S. Federal Reserve. Despite recent attempts to push lower, the pair found firm technical support above 1.1300, with downside limited ahead of Wednesday’s key interest rate decision.
Fed Policy in Focus
All eyes are on the Federal Reserve’s midweek policy announcement, which is expected to maintain interest rates at current levels. However, market participants are more interested in the tone of Fed Chair Jerome Powell’s remarks. Any dovish shift—or even subtle hints toward a potential rate cut in the near future—could weigh heavily on the U.S. Dollar and propel EUR/USD higher.
The Fed is facing increasing political and market pressure to lower rates, particularly from the Trump administration, which argues that lower borrowing costs could ease U.S. debt burdens. Nonetheless, the central bank remains committed to its dual mandate: managing inflation and maintaining maximum employment, potentially resisting such political influence.
Technical Outlook for EUR/USD
- Support: EUR/USD is holding above 1.1300, with additional support near the 1.1200 mark if a breakdown occurs.
- Resistance: Immediate resistance is seen around 1.1380, followed by 1.1450.
- Trend: The pair has pulled back from recent multi-month highs near 1.1500, but remains in a consolidation phase with limited downside momentum.
Short-Term Forecast
As the EUR/USD awaits the Fed’s verdict, traders should brace for potential volatility. A dovish surprise could trigger a breakout toward 1.1450, while a hawkish tone may pressure the pair back toward 1.1200. Until then, the pair is likely to remain range-bound with low conviction from either bulls or bears.
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