The US Federal Reserve’s (Fed) meeting on December 10–11 is a pivotal event for global foreign exchange (FX) markets. Many currency pairs, including EURUSD, will hinge on the central bank’s rhetoric and forward guidance, whether hawkish or dovish.
Moderately hawkish scenario (most likely)
The consensus forecast suggests a 25-basis-point rate cut with cautious comments on further steps in 2026. Stubbornly high inflation is expected to prevent the regulator from committing to a sustained easing cycle.
As a result, USD is likely to strengthen against all major currencies (EUR, GBP, JPY, AUD, CAD) due to relatively tight monetary conditions and the Fed’s tentative stance.
Fully hawkish scenario
In this case, the US central bank would state inflation as a key issue on the agenda, maintaining an aggressive approach despite a potential December rate cut. Such a move may be the last before a prolonged pause.
The greenback would surge decisively, triggering a plunge in EURUSD, which could drop below its key support levels. The GBPUSD pair would tell a similar story, while USDJPY may head higher because of the growing monetary divergence between Japan and the US, benefiting the latter.
Commodity currencies (AUD, CAD, NZD) and gold could face tough times, losing their appeal amid a stronger dollar, rising bond yields, and weak risk appetite.
Dovish scenario (least likely)
This would also involve a 25-basis-point cut coupled with a signal that further easing is probable in early 2026 to counteract economic slowdown fears.
Under this scenario, USD may plummet against major currencies, while EURUSD and GBPUSD could rally, exceeding key resistance levels amid a weaker dollar. The USDJPY pair would lose its upward momentum as the interest rate differential narrows. Commodity currencies (AUD, CAD, NZD) could get a boost as risk appetite increases.
On the flip side of the coin, an even more extreme outcome would be for the Fed to refrain from cutting rates altogether, holding them steady at the upcoming meeting. Such an unexpected decision could be driven by surprisingly robust economic data and unfavorable inflation reports. However, if it materializes against all odds, turmoil and heightened volatility will be guaranteed. This scenario suggests that the greenback would skyrocket, while stock markets and commodity currencies would fall off a cliff.
Ultimately, the US dollar is positioned to gain strength no matter how things turn out, sending the EURUSD pair down.
The overall recommendation is to sell EURUSD. Lock in profits at the level of 1.5900. Place Stop Loss at 1.1650.
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.
This content is for informational purposes only and is not intended to be investing advice.
