EUR/USD is trading around 1.1459 on Thursday, close to a seven-week low. The US dollar remains supported by the Federal Reserve’s first interest rate increase in three years and signals that further monetary tightening could follow later this year.
The FOMC unanimously raised the federal funds target range by 25 basis points to 3.75–4.00%, in line with market expectations. Fed Chair Kevin Warsh noted that inflation remains too high. Data released last week also showed that core inflation accelerated more sharply than expected in August.
Meanwhile, Donald Trump has once again called on social media for interest rates to be cut rapidly to 1% or lower, although he did not directly criticise Warsh. Against this backdrop, markets continue to focus primarily on the Federal Reserve’s own guidance and the likelihood of further rate increases.
The Bank of England is due to announce its interest rate decision today, with rates expected to remain unchanged. Meanwhile, markets expect the Bank of Japan to raise rates on Friday.
Geopolitical pressure has eased somewhat as oil prices have fallen on hopes that Saudi Arabia can restore supplies through the East-West pipeline. This has provided some relief from inflation concerns, although it has not materially changed the broader hawkish outlook for monetary policy.
EUR/USD technical analysis
On the H4 EUR/USD chart, the market has completed a downward move towards 1.1453. A corrective rebound towards 1.1494 cannot be ruled out in the short term.
Once this correction is complete, the main scenario envisages another decline towards 1.1417.
The MACD indicator supports a short-term correction. Its signal line remains below zero and is near its recent lows, suggesting that the current downward momentum may be approaching a temporary pause.
On the H1 EUR/USD chart, the market has completed another move lower towards 1.1453. A consolidation range is currently forming above this level.
Today, a move higher towards 1.1494 is expected as part of the correction.
The Stochastic oscillator supports this scenario. Its signal line is above 20 and is pointing firmly upwards towards 80, indicating potential for further short-term recovery.
EUR/USD outlook
EUR/USD remains under broader pressure as the Federal Reserve’s rate increase and the prospect of further monetary tightening continue to support the US dollar.
From a technical perspective, the pair could first stage a corrective rebound towards 1.1494. Once this move is complete, the main bearish scenario points to a renewed decline towards 1.1417.
