EUR/USD trims losses, revisits 1.1860 ahead of the Fed

Following an early drop to the 1.1830 zone, EUR/USD now picks up some upside impulse and retest the 1.1860 zone, down marginally for the day. The pair’s knee-jerk comes on the back of a vacillating price action around the US Dollar ahead of the crucial interest rate decision by the Fed later in the European evening.

EUR/USD Technical Overview

The daily chart for the EUR/USD pair shows it holds above the upper end of its Tuesday range, trading in the 1.1840 region. The same chart shows technical indicators easing from their weekly peaks, although with limited downward strength and holding well above their midlines. Finally, a mildly bullish 20 Simple Moving Average (SMA) hovering around 1.1700 holds far above the longer ones, in line with the dominant bullish trend.

The 4-hour chart shows that EUR/USD is correcting overbought conditions, with technical indicators retreating from extreme levels. Nevertheless, the Relative Strength Index (RSI) indicator aims lower at around 70, far from suggesting another leg south. At the same time, the pair develops far above all its moving averages, with a firmly bullish 20 SMA currently at 1.1780.

Support levels: 1.1830 1.1785 1.1740

Resistance levels: 1.1880 1.1920 1.1955

Fundamental Overview

The EUR/USD pair eased from a fresh 2025 peak of 1.1878 hit on Tuesday, as investors gear up for the Federal Reserve (Fed) monetary policy announcement. The Fed is widely anticipated to cut the benchmark interest rate by 25 basis points (bps) following its two-day meeting, and announce it in the American afternoon.

The US Dollar (USD) benefits from some profit-taking ahead of the announcement, but remains weak across the FX board as market players expect a dovish message from Fed officials and hope for hints about upcoming interest rate cuts in October and December. The central bank will release an updated Summary of Economic Projections (SEP) or dot-plot, in which policymakers will share their views on economic performance and future monetary policy decisions.

Earlier in the day, the Eurozone released the final estimate of the August Harmonized Index of Consumer Prices (HICP), confirming it at 2% year-on-year (YoY), below the 2.1% previously calculated.

Other than that, the United States (US) published August Building Permits, which were down by 3.7% in the month, and Housing Starts, which shed 8.5% on a monthly basis.