Home EUR/USD Forecast: Dollar Near 2-Week Low After Fed Minutes

EUR/USD Forecast: Dollar Near 2-Week Low After Fed Minutes

  • The Fed minutes revealed a cautious approach from policymakers.
  • The US released a mixed report on producer prices for September.
  • ECB policymakers noted that new shocks could potentially necessitate a continuation of the tightening cycle.

The EUR/USD forecast is bullish, with the dollar near a two-week low as investors digested the recent Federal Reserve meeting minutes. Notably, the minutes revealed a cautious approach from policymakers. They cited uncertainties surrounding the economy, oil prices, and financial markets as factors “supporting the case for proceeding carefully in determining the extent of additional policy adjustments.”

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Moreover, a mixed report on US producer prices for September added to the cautious sentiment. There was a higher-than-expected rise in energy and food costs. Nevertheless, inflation pressures at the factory level continued to ease.

Meanwhile, the European Central Bank (ECB) has made substantial progress in reining in inflation to meet its target. However, two influential policymakers noted that new shocks could necessitate continuing the tightening cycle. 

The ECB has raised interest rates at its past ten meetings. However, there’s an ongoing debate among policymakers about whether the bank has done enough or if more rate hikes are still a viable option.

Dutch central bank chief Klaas Knot mentioned, “We’ve made important progress in getting inflation back on track. However, we still have a long and challenging road ahead.”

Pablo Hernandez de Cos, the head of Spain’s central bank, expressed confidence that even underlying inflation, a source of concern for some, has shown improvement. As a result, keeping interest rates unchanged for some time before considering cuts is a plausible scenario. 

EUR/USD key events today

Investors are expecting to receive several key reports from the US, including:

  • The Core Consumer Price Index report.
  • The Consumer Price Index report.
  • Initial jobless claims.
  • Crude oil inventories.

EUR/USD technical forecast: Bulls gain momentum above the 1.0600 resistance level.

EUR/USD technical forecast
EUR/USD 4-hour chart

The bullish bias for the EUR/USD pair has strengthened on the 4-hour chart as the price has broken above the 1.0600 key resistance level. Moreover, the price continues to trade above the 30-SMA, with RSI approaching the overbought region.

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Bulls will reach the next hurdle at the 1.0700 level if they keep this trend. However, the journey might be slow as the current move is not steep. Nevertheless, the bullish bias will remain if bulls keep the price above the SMA and the RSI above 50.

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Saqib Iqbal

Saqib Iqbal

Saqib Iqbal is a market analyst, prop fund trader and mentor, serving the industry with his analysis and educational content since 2011. The author has great exposure to different financial markets and institutions. He's well-known for his day trading reviews and multiple timeframe analysis.