TL;DR:
- EUR/USD consolidates around 1.1639 as markets await Wednesday’s Fed meeting, with a 96.7% probability priced in for a 25-basis-point rate cut
- ECB expected to hold rates steady at 2.00% for third consecutive meeting on Thursday amid stabilizing Eurozone inflation
- Technical indicators remain bearish with pair trapped below key moving averages clustered between 1.1650-1.1690
The Euro held steady against the US Dollar on Monday as traders adopted a cautious stance ahead of pivotal monetary policy decisions from both the Federal Reserve and European Central Bank this week. EUR/USD was trading at 1.1639 during American hours, while the US Dollar Index declined modestly to 98.88, reflecting market uncertainty before the central bank announcements.
Market participants are bracing for the Fed’s two-day Federal Open Market Committee meeting beginning Tuesday, with an overwhelming consensus expecting another 25-basis-point interest rate reduction.
According to the CME FedWatch Tool, traders have priced in a 96.7% probability of a quarter-point cut at the October 29-30 meeting. The anticipated move follows September’s rate reduction and comes in response to softer-than-expected inflation data released last week, alongside signs of a cooling labor market, despite core price pressures remaining above the Fed’s 2% target.
In contrast, the European Central Bank is widely projected to maintain its benchmark interest rate at 2.00% when it meets on Thursday, marking the third consecutive meeting without policy changes. ECB officials appear content to hold steady as recent economic data shows improving business activity across the Eurozone and inflation hovering around the central bank’s 2% objective, reducing the urgency for further monetary policy adjustments.
From a technical standpoint, EUR/USD remains trapped within a descending channel with limited momentum in either direction. The currency pair continues trading below a critical resistance zone formed by the 21-day, 50-day, and 100-day Simple Moving Averages, which cluster tightly between 1.1650 and 1.1690.
The Relative Strength Index sits at 47, indicating neutral-to-bearish momentum. Immediate support levels are identified at 1.1600 and 1.1550, while bulls would need to push the pair decisively above the 50-day SMA at 1.1690 to shift the near-term technical bias toward a more constructive outlook.
