EUR/USD Holds Steady Ahead of Fed Meeting, Focus on Middle East Outlook

EUR/USD is slightly lower on Wednesday, trading with minimal movement around 1.1708. The market is preparing for a Federal Reserve meeting, which could be Jerome Powell's last before his term ends in May.

The regulator is expected to keep rates unchanged. However, investors will closely monitor its assessment of how the Middle East conflict is affecting the economy.

Other major central banks, including the ECB, the Bank of England, and the Bank of Canada, will also announce policy decisions this week. The Bank of Japan has already delivered a more hawkish signal by keeping rates unchanged.

Geopolitics continues to support the US dollar. US-Iran talks have stalled, the Strait of Hormuz remains closed, and inflation risks are rising.

According to media reports, Donald Trump was dissatisfied with Iran's latest proposal and insisted that the nuclear issue must be included in negotiations from the outset.

Technical Analysis

On the H4 chart of EUR/USD, the pair is trading within a consolidation range around 1.1688, currently extending down to 1.1675. A move lower below this level is likely, with potential downside towards 1.1656 and possibly 1.1616. Technically, this scenario is confirmed by the MACD indicator, with its signal line below zero and pointing firmly downwards, reflecting continued bearish momentum.

On the H1 chart, EUR/USD is developing a move lower towards 1.1685. A corrective rebound to 1.1705 may follow, before a further decline towards 1.1650 and potentially 1.1616. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below 80 and pointing firmly downwards towards 20.

Conclusion

EUR/USD is trading sideways ahead of the Federal Reserve meeting, with markets focused on how policymakers assess the economic impact of the Middle East conflict. While the Fed is widely expected to hold rates steady, this meeting is particularly significant as it may be Jerome Powell's last before his term ends in May. Geopolitical pressures remain firmly in place: US-Iran talks have stalled, the Strait of Hormuz is closed, and inflation risks are rising, all of which continue to support the US dollar. Additional central bank decisions from the ECB, BoE, and BoC this week add to the cautious market tone. Technically, the euro appears vulnerable, with indicators pointing to further downside towards 1.1650–1.1616 in the near term. The direction will likely hinge on the Fed's tone regarding both rates and geopolitical risks.

By RoboForex Analytical Department

Disclaimer:

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.