Can euro hold steady below 1.1150 as traders await Fed rate decision?

• EUR/USD remains little changed near 1.1125 as early Asian trading gets under way on Wednesday.
• An unchanged benchmark rate is expected from the Fed at its October meeting.
• Wednesday brings the Fed’s latest policy announcement, followed by the ECB’s decision on Thursday.

Caution ahead of the US Federal Reserve (Fed) rate decision is keeping EUR/USD near 1.1125 in Wednesday’s early Asian session. With the announcement due later on Wednesday, traders are staying on the sidelines rather than building large positions. The focus will then turn to the European Central Bank (ECB) policy meeting on Thursday.

An unchanged target range of 3.75% to 4.0% is the widely anticipated outcome of Wednesday’s Fed decision. For traders, the key focus will be any clues from Fed Chair Kevin Warsh about the central bank’s outlook.

According to the CME FedWatch tool, markets assign a probability of nearly 92.8% to the US central bank leaving rates unchanged at its October policy meeting. For December, the probability of a US rate increase is 84.4%.

Bank of America analysts led by Mark Cabana said: "USD risks skew lower on a hold: hawkish messaging is broadly neutral, while a dovish hold risks outsized USD weakness,"

Selling pressure could persist for the Euro (EUR) in the near term as elevated energy costs, swings in French government bonds and concerns over France’s fiscal position weigh on the currency. Against the US Dollar (USD), the Euro was down 1.70% in October and on course to rank as the weakest developed-market currency for the month.

After raising rates by 25 bps in September, the ECB is set to keep its key interest rates steady at Thursday’s upcoming meeting.

Can the Euro recover as ECB caution meets firm Fed expectations?

Energy costs and fiscal and social concerns continue to constrain the Euro, according to strategists at Societe Generale. They note that it “really hasn’t been able to manage much of a bounce, regardless of shorts,” citing “energy prices, fiscal concerns and social unrest” as pressures on the single currency. Their assessment is that “if the FOMC message (whatever that looks like in the brave new world) keeps December hike expectations alive, our bias is to remain dollar-positive, and unless the ECB is very hawkish, European economic fundamentals will weigh.”

What do Warsh’s investment and AI demand warnings signal without a policy commitment?

A watchful approach, rather than a decisive hawkish or dovish shift, emerged from Fed Chair Warsh’s moderately constructive remarks. The message carried slightly less impact, with an FXS Speechtracker score of 5.6/10 against the established baseline of 6.1/10. Although Warsh pointed to structural growth and a surge in investment, the acknowledgement of being "over-scarred from the global financial crisis" highlighted caution over financial stability. By stressing that upcoming meetings should not be prejudged and that AI’s near-term effect on employment remains uncertain, Warsh signalled reliance on data and an unwillingness to commit to a predetermined policy course.

Markets appeared to view the speech as consistent with existing expectations rather than as a change in the policy narrative. The FXS Fed Sentiment Index recorded a 0.00-point daily change, remaining firmly hawkish at 127.51. Taken alongside the middling FXS Speechtracker score, that unchanged reading suggests Warsh’s remarks confirmed the prevailing hawkish bias without providing a fresh catalyst for Dollar repricing.

Technical Analysis: Can EUR/USD shake off its bearish bias below the 100-day SMA?

Bearish pressure continues to dominate the EUR/USD daily chart. The pair trades below the Bollinger Bands’ 20-day simple moving average (SMA) and considerably below the 100-day moving average, leaving both indicators as significant overhead barriers. Trading just beneath the lower Bollinger Band further reinforces the downside bias. However, with the Relative Strength Index (RSI) at 30.3 and close to oversold territory, occasional corrective rebounds remain possible even as sellers retain control.

A move higher would first encounter resistance around 1.1130 at the lower Bollinger Band. Beyond that lie the Bollinger mid-line near 1.1205 and the upper band at 1.1280, followed by the more significant 100-day moving average around 1.1440. Below the current spot price, the present set of indicators identifies no meaningful support, leaving EUR/USD exposed to fresh lows if weakness continues. Only a move back above the 20-day SMA would begin to reduce the prevailing bearish pressure.

(The technical analysis of this story was written with the help of an AI tool. Know more.)