EUR/USD Price Analysis – Sep 20, 2023

Daily Price Outlook

During the Asian trading session on Wednesday, the EUR/USD currency pair continued to climb, reaching approximately 1.0690. Traders are being cautious and not taking strong positions, likely because they're waiting for the highly anticipated FOMC policy meeting. Moreover, the strength of the US dollar is seen as a key factor preventing the EUR/USD pair from making further gains

Right now, people in the market are being extra careful and attentive because they're eagerly awaiting the results of the upcoming FOMC meeting. They're really keeping an eye out for any hints or information that might come out of it. This cautious attitude and the current strength of the dollar are both playing a big role in how this currency pair is moving.

Fed's Upcoming Decision and Its Impact on EUR/USD

It's worth noting that the Federal Reserve (Fed) is set to announce its decision during the US session. Most people expect them to keep interest rates where they are, between 5.25% and 5.5%. However, investors are anticipating the Fed's firm stance on inflation and the possibility of a 0.25% rate hike later this year.

Recent economic data shows that the US economy is still strong, giving the Fed reason to keep interest rates higher for longer. Hence, the Federal Reserve's statement and Fed Chair Jerome Powell's remarks in the press conference will be closely monitored. The news may strengthen the USD, potentially causing the EUR/USD pair to fall as investors favor the stronger US economy.

ECB's Rate Hike Pause Could Weaken EUR/USD

Besides this, the European Central Bank (ECB) recently raised interest rates for the 10th consecutive time, pushing them up by 0.25% to a record 4%. Yet, they dropped hints that this long series of rate hikes might be coming to an end. They also lowered their predictions for inflation and economic growth in 2024 and 2025, suggesting that more rate hikes might be on hold.

On top of that, the most recent data indicates that inflation has eased compared to July. This could potentially lessen the Euro's strength against the US Dollar (EUR/USD). So, the European Central Bank (ECB) is taking a step back from continuously raising rates, at least for the time being. This news implies that the EUR/USD currency pair might lose some strength because the ECB seems to be holding off on increasing interest rates due to the lowered inflation and growth forecasts.

EUR/USD - Technical Analysis

The EUR/USD currency pair has engaged with the upper boundary of its bearish channel and now exhibits consolidation beneath it. Notably, the EMA50 reinforces the integrity of this resistance, hinting at a continuation of the projected bearish trajectory in the foreseeable future. This movement sets its sights on the 1.0635 level, with further descent to 1.0515 should the former be breached.

The current upbeat momentum of the Stochastic oscillator may induce transient lateral movements before a reversion to a downward trend. It's imperative to acknowledge that a surpass of the 1.0705 mark would negate the anticipated decline, potentially propelling the price towards intraday highs around 1.0785 prior to any subsequent bearish endeavors. For today, the trading bracket is estimated to stretch from a foundational support at 1.0590 to a resistance cap at 1.0740.