EURUSD corrects ahead of key Fed decision

Following the EURUSD pair’s unsuccessful attempt to overcome the 1.16600 level, the downtrend resumed. The price is currently trading near the daily low, suggesting clear seller dominance. The pair has already lost almost half of its gains from the rally started on October 22, signaling profit-taking and increased bearish sentiment in the market.

The technical setup on the EURUSD daily chart is confirmed by indicator dynamics, suggesting that short-term bullish momentum is exhausted. The Stochastic Oscillator, while staying neutral, with %K at 72 and %D at 57, is approaching overbought conditions, supporting the case for the current decline. The Chaikin Oscillator is flashing weakening buyer activity, though it remains in positive territory. The indicator reversed downward from its October 28 peak, reflecting reduced capital inflows and a loss of buyer interest at current levels.

The fundamental picture remains unclear. Despite promising data from Germany, investors are concerned about the eurozone's long-term fiscal sustainability, particularly due to political turmoil in France. However, monetary policy divergence between regulators acts as a support for the single currency. The European Central Bank (ECB) has already finished its easing cycle, while the US Federal Reserve (Fed) is only in the beginning of this path. The Fed rate cut expected today may be accompanied by dovish rhetoric, reinforcing market hopes for another reduction later this year. This would put additional pressure on the dollar and support the EURUSD pair.

Technical indicators signal a near-term resumption of bearish momentum, which could push the price down. However, the market may gain a new upward impulse after the Fed's decision, reversing the current downtrend.

Take into account the following trading recommendation:

Buy EURUSD during a correction near the 1.16250 level. Place Take profit at 1.17300 and Stop loss at 1.15770.

This forecast is valid between October 29 and November 5, 2025.