The EUR/USD pair commenced the week favorably, climbing to 1.1653. The recent shift was driven by increasing anticipation for a Federal Reserve rate cut this Wednesday, which continues to exert pressure on the US dollar. The current market assessment indicates an 88% likelihood of a 25-basis-point cut, reflecting a notable rise from the 67% probability observed merely a month prior. Nonetheless, ambiguity shrouds the policy trajectory beyond this week. A scenario involving a “hawkish cut” also remains plausible, where Chair Jerome Powell could implement the anticipated easing while concurrently indicating a more cautious, data-dependent strategy for 2026. The data calendar is set to contribute to increased volatility, beginning with the postponed JOLTS job openings report for October, which is scheduled for release on Tuesday, delivering an essential update on the tightness of the labor market, encompassing hiring, layoffs, and quit rates.
This week, attention will be directed towards the monetary policy decisions of central banks in Australia, Brazil, Canada, and Switzerland, as all four are anticipated to maintain their benchmark rates unchanged. On the H4 chart, EUR/USD exhibits a distinct upward trend, currently positioned just beneath a significant resistance level at 1.1682. The pair’s placement above the middle Bollinger Band indicates a strong presence of buyers in the market. The slow widening of the upper band points to increasing volatility and implies that the market may be gearing up for a possible breakout effort. A decisive close above 1.1682 would indicate a strong bullish signal, paving the way towards the next key resistance area of 1.1770–1.1780. On the other hand, if a pullback takes place, the closest significant support level is at 1.1547, and a decline beneath this threshold would indicate a more significant corrective shift towards the lower Bollinger Band.
The H1 chart indicates that the pair is currently in a consolidation phase following a robust impulse that approached the 1.1680 resistance level. The asset is presently maintaining its position above a significant local support level at 1.1635, which served as the starting point for the latest recovery. The Stochastic oscillator indicates overbought conditions, suggesting a potential near-term pause or a minor pullback may be forthcoming. Despite this, the broader H1 structure remains moderately bullish, with the price trading above the middle Bollinger Band and its lower band providing dynamic support. A sustained breakout above 1.1680 would validate the continuation of the uptrend, aiming for 1.1720 and possibly reaching 1.1750, while on the downside, a failure to maintain 1.1635 would indicate the initial signs of diminishing momentum, possibly leading to a correction towards the subsequent demand zone at 1.1600–1.1580.
EUR/USD is exhibiting a strong bid as we approach a crucial Fed meeting. The anticipation of a rate cut is offering immediate support; however, the central bank’s forward guidance will be essential in assessing the longevity of the rally. The pair is currently at a critical juncture, requiring a breach above 1.1680/82 to initiate the next upward movement. Conversely, maintaining a position below 1.1635 would indicate that a phase of consolidation or correction is imminent.