Selling EURUSD in anticipation of stronger dollar

Fed Chairman Jerome Powell said Tuesday that the central bank has to take into account the conflicting risks of persistent inflationary pressures and a weakening labor market before making further interest rate decisions. The official underlined that consumer prices could rise in the short term, while employment figures might drop, putting the US regulator in a tough spot. Powell’s recent comments were similar to his speech last week, when the Fed lowered its key rate by a quarter of a percentage point to 4–4.25%. This range is still considered high enough to curb inflationary pressures, yet flexible enough to address potential economic changes. The US monetary policy does not follow a beaten path, Powell said.

The next Fed meeting is scheduled for October 28–29. Market players expect a continuation of the easing cycle. This is in line with expert forecasts for October and December cuts by 25 basis points each, presented last week after the central bank’s decision. However, these projections are not unanimous. Powell’s stance remains evasive, as he is waiting for additional data on inflation and employment. He did not give any hints as to when the Fed could reduce borrowing costs again, highlighting the risk of choosing the wrong pace of easing. If the pace is too fast, it could trigger another surge in inflation. If it is too slow, it might cause an unexpected rise in unemployment.

This uncertainty casts doubt on the anticipated rate cuts, which is strengthening the US dollar and putting pressure on EURUSD.

The overall recommendation is to sell EURUSD. Profits should be taken at the level of 1.1737. Stop Loss could be set at 1.1870.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.