EURUSD Under Pressure Due to Fed Decision

The EURUSD pair remains under pressure, hovering near the 1.0879 level, as traders assess the Federal Reserve's (Fed) policy stance and the broader economic outlook. Despite brief rallies, the euro continues to struggle against a strengthening U.S. dollar. Market participants are closely watching key technical levels and recent comments from Fed Chair Jerome Powell for further direction.

The euro fell sharply during Wednesday's early trading hours, remaining around the 1.09 level as markets await further guidance from the Federal Open Market Committee (FOMC) meeting. Traders are likely adjusting their positions ahead of the press conference, with the 1.08 level emerging as a critical support zone. A decisive break below this point could signal further declines, while a move above the 1.0950 level may pave the way toward 1.12.

From a technical perspective, the pivot point at 1.0899 serves as a key inflection zone. A sustained break below this level keeps the bearish outlook intact, with immediate support at 1.0830 and a potential downside target of 1.0776. Conversely, if the euro breaks above 1.0899, it could rally toward 1.0954, with additional resistance at 1.1015. The 50-day Exponential Moving Average (EMA) at 1.0900 adds further technical resistance, reinforcing short-term selling pressure.

The Fed's recent decision to maintain interest rates at 4.25%-4.50% for the second consecutive meeting aligns with market expectations. However, Chair Powell emphasized a cautious approach to rate cuts, highlighting the persistent uncertainty surrounding U.S. economic policy under President Donald Trump. Powell stated that the central bank remains in no hurry to adjust rates, especially given the inflationary impact of tariffs and ongoing economic uncertainties.

Despite leaving the benchmark rate unchanged, the Fed raised its core Personal Consumption Expenditures (PCE) inflation forecast for 2024 to 2.8%, up from the previous 2.5% estimate. Additionally, the Gross Domestic Product (GDP) growth projection was revised downward to 1.7% from 2.1%, reflecting concerns over slower economic expansion despite a resilient labor market.

In contrast to the Fed's cautious stance, President Trump continues to advocate for lower interest rates, arguing that rate cuts would ease the economic burden of tariffs. Following the Fed's announcement, Trump reiterated his call for more accommodative monetary policy, urging the central bank to "do the right thing" and lower rates to stimulate economic growth.

The market's focus now shifts to upcoming U.S. economic data, including the weekly Initial Jobless Claims report. Any significant increase in unemployment claims could limit the dollar's gains and provide support for the euro. Until a decisive breakout occurs, the EURUSD pair is likely to remain range-bound, with traders monitoring both technical levels and further policy signals from the Federal Reserve and the U.S. administration.