Markets brace for today's Federal Reserve rate decision amid heightened uncertainty surrounding the global economy, trade tensions, and geopolitical risks. While current pricing still reflects expectations for two Fed rate cuts by December, the outlook could shift significantly should Powell adopt a more aggressive tone during today's press conference.
Today's meeting is likely to conclude without any changes to the interest rate, leaving it unchanged at 4.5%. As a result, greater attention will be focused on the FOMC statement and the subsequent press conference. Arguments in favor of maintaining tight monetary conditions could provide momentum for EURUSD weakening. On one hand, deflationary trends in the US economy could lead to slower growth, creating conditions where a rate cut may be necessary to avoid stifling economic activity. On the other hand, if high inflation persists, it could justify keeping rates at their current level. Which of these two trends will prevail, and which path the Fed will ultimately choose, remains to be seen.
Additionally, market attention will focus on the interest rate projections for Q2 2025, 2026, and the longer-term outlook. If even some of these forecasts come in higher than previous estimates, this would signal potential US dollar strength and EURUSD weakness. In such a scenario, the pair could decline toward the 1.14220 level. This technical level served as the pivot point of June’s first-decade consolidation range, which the pair subsequently broke upward from. Now, conditions may be aligning for a retest of this zone as potential future support.
The overall recommendation is to sell EURUSD due to the Fed's commitment to maintain restrictive monetary conditions in the nearest future.
Profits should be taken at the level of 1.1422. A Stop loss could be set at the level of 1.15800.
The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.
This content is for informational purposes only and is not intended to be investing advice.
