EUR/USD approaches critical resistance as Fed decision looms
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The EUR/USD pair surged to a fresh six-month high of $1.0945 on Wednesday before pulling back to $1.0872, reflecting uncertainty ahead of the Federal Reserve’s policy decision. The euro’s impressive 6% rally over the past weeks has been driven by increasing skepticism over the dollar’s strength as Trump’s tariff policies fuel market instability. However, the recent price action suggests that a double top resistance level may be forming, posing a potential barrier to further upside.
The euro’s rebound follows its 7% decline from November to mid-January, when Trump’s election victory initially boosted the dollar. However, with global trade tensions rising and U.S. growth concerns intensifying, sentiment has shifted in favor of the euro, as traders seek more stability in European assets. The currency pair now faces a key technical inflection point, with $1.0950 acting as immediate resistance. A breakout above this level could pave the way for an extension toward $1.10–$1.12, while a rejection might trigger a pullback toward the $1.08 range.
The next catalyst for forex markets will be the Federal Reserve’s rate decision and forward guidance. While expectations overwhelmingly favor a hold at the current 4.25%–4.50% range, Chair Jerome Powell’s stance on future rate moves will be crucial. If the Fed signals a dovish tilt, the euro could push higher, breaking above resistance. However, if Powell emphasizes inflation risks and hints at delaying rate cuts due to Trump’s tariff-driven inflationary pressures, the dollar could recover, sending EUR/USD lower.
For traders, the $1.0950 resistance remains the key level to watch. A sustained breakout would reinforce bullish momentum, while failure to break higher could signal a retracement toward $1.08 or lower, depending on the Fed’s stance. The short-term outlook remains neutral to bullish, contingent on the upcoming Fed decision and Powell’s
The euro’s rebound follows its 7% decline from November to mid-January, when Trump’s election victory initially boosted the dollar. However, with global trade tensions rising and U.S. growth concerns intensifying, sentiment has shifted in favor of the euro, as traders seek more stability in European assets. The currency pair now faces a key technical inflection point, with $1.0950 acting as immediate resistance. A breakout above this level could pave the way for an extension toward $1.10–$1.12, while a rejection might trigger a pullback toward the $1.08 range.
The next catalyst for forex markets will be the Federal Reserve’s rate decision and forward guidance. While expectations overwhelmingly favor a hold at the current 4.25%–4.50% range, Chair Jerome Powell’s stance on future rate moves will be crucial. If the Fed signals a dovish tilt, the euro could push higher, breaking above resistance. However, if Powell emphasizes inflation risks and hints at delaying rate cuts due to Trump’s tariff-driven inflationary pressures, the dollar could recover, sending EUR/USD lower.
For traders, the $1.0950 resistance remains the key level to watch. A sustained breakout would reinforce bullish momentum, while failure to break higher could signal a retracement toward $1.08 or lower, depending on the Fed’s stance. The short-term outlook remains neutral to bullish, contingent on the upcoming Fed decision and Powell’s