EUR/USD Forecast: Bulls Defend Channel as Market Awaits Fed Decision

The EUR/USD pair is trading slightly lower near 1.1550 in early Monday Asian hours, reflecting modest US Dollar strength. However, the pair remains within its ascending channel, signaling a resilient bullish structure.

On the 4-hour chart:

• The Relative Strength Index (RSI) stays above 50, indicating bullish momentum
• Price holds above the 20-period Simple Moving Average (SMA), reinforcing upward bias

📈 Resistance levels to watch:

• 1.1600 – top of the ascending channel
• 1.1660 – static resistance
• 1.1700 – psychological and technical level

📉 Support levels:

• 1.1500–1.1490 – mid-channel support and 20-SMA
• 1.1450 – 50-period SMA
• 1.1420 – lower channel boundary

The technical setup suggests bulls remain in control, and a break above 1.1600 could accelerate buying interest ahead of key macro events.

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Fundamental Drivers: Fed in Focus as Geopolitical Risks Cloud Outlook

The euro ended last week on a bullish note after softer US inflation data and rising eurozone CPI figures supported the single currency. However, Friday’s Israel-Iran conflict flare-up triggered safe-haven demand for the US Dollar, briefly reversing EUR/USD gains.

📊 Recent economic prints:

• US CPI and jobless claims came in weaker than expected
• China’s industrial production slowed (5.8% YoY vs. 6.1% prior)
• Eurozone inflation matched forecasts (1.9% YoY; 0% MoM)

Despite a temporary dip on Middle East tension, EUR/USD has shown relative strength, buoyed by Fed rate cut expectations and improved eurozone data.

💬 Upcoming risk events:

• FOMC policy decision on Wednesday – key rate path clarity expected
• ECB speeches and EU CPI confirmation
• Geopolitical developments remain a wildcard for safe-haven flows

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Outlook: Bullish Above 1.1500, But Volatility Ahead

Near-term bias remains bullish as long as EUR/USD stays within the ascending channel and above the 1.1500 key support zone. However, traders should brace for volatility mid-week as the Federal Reserve delivers its policy decision.

Should the Fed strike a dovish tone, EUR/USD could break above 1.1600, targeting 1.1700. Conversely, any hawkish surprises or escalation in Middle East tensions could pull the pair back toward 1.1450–1.1420.

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Conclusion:
The euro’s bullish trend remains intact within the ascending channel, but the upcoming FOMC decision and geopolitical uncertainty are likely to dictate the next major move. Bulls need a strong catalyst to overcome 1.1600 and push higher, while bears are watching for a break below 1.1500 to challenge the trendline support.

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