- EUR/USD has charted a narrowing price over the last four trading days.
- The Fed delivered a hawkish hike on Monday, boosting prospects of a downside move in the EUR.
EUR/USD’s struggle for strong directional bias continues after hawkish Federal Reserve (Fed) rate cut.
The currency pair has been restricted to a narrowing price range (lower highs, higher lows) since Sept. 12, as seen in the 4-hour chart.
The Federal Reserve cut interest rates by 25 basis points for the second straight meeting, however, officials were split on the need for further easing with five seeing no change in rates by the end of the year, five wanting one more cut and seven expecting two cuts, according to Bloomberg.
Hence, most observers believe the Fed may be done cutting rates for now. The market, therefore, may price out expectations for a rate cut in December, possibly keeping the American Dollar better bid in the short-term, especially against the EUR, as the European Central Bank (ECB) recently adopted a strong dovish bias.
So, the risks in EUR/USD looks skewed to the downside. The Eurozone data docket is light with Current Account s.a (Jul) scheduled for release at 08:00 GMT. The EUR pairs, however, are unlikely to see big moves on that day and may take cues from comments by ECB’s Coeure and Lautenschlager.
Also, the Bank of England’s rate decision and the resulting action in EUR/GBP, if any, could influence EUR/USD.
As of writing, EUR/USD is trading at 1.1038, representing little change on the day.
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Technical levels
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