EURUSD is expected to correct after Fed announces rate decision

On Wednesday morning, September 17, 2025, the EURUSD currency pair traded near 1.18527 following its previous rally bolstered by investor agitation around the Federal Reserve’s (Fed) interest rate decision. Markets have priced in almost a 100% probability that the central bank will resume monetary easing, starting with a 25-basis-point cut. Such sentiment puts significant pressure on the dollar.

Unlike the Fed, the European Central Bank (ECB) adheres to a more hawkish rhetoric. The latter kept rates unchanged at 2% during its previous meeting, thereby supporting the euro. The growing policy divergence between the two regulators is now favoring a rise in the single currency. In addition, eurozone manufacturing data and an unexpected surge in German investor sentiment (ZEW index) have added positivity to the euro.

However, the main event of the week has already been factored in, so there is a high risk of volatility in the market due to the “buy the rumor, sell the news” phenomenon. If the Fed cuts rates by the anticipated 0.25% and Jerome Powell does not hint at a continuation of this easing cycle, the dollar might be less pressured. But if the Fed Chair’s stance is not as dovish as expected, the US currency could strengthen.

From a technical perspective, EURUSD keeps trading upward, supported by the price’s surge to 1.18775. The Stochastic Oscillator is in the upper area of the neutral zone (65, 58), indicating bull dominance over bears and no signs of overbought conditions. That said, the indicator remains below 80, reducing the chance of a near-term correction. The Chaikin Oscillator signals increasing buying pressure and strengthening upward momentum.

Pay attention to the suggested trading plan:

Given market projections of the Fed’s dovish stance and technical indicators approaching overbought territory, consider taking short positions for a corrective pullback.

Sell EURUSD at the current level, with Take profit set at 1.17150 and Stop loss at 1.19300.

This forecast remains valid from September 17 to September 24, 2025.