EUR/USD is facing challenges in maintaining levels above 1.0950, with the U.S. Dollar (USD) gaining strength as traders adjust their expectations for Federal Reserve (Fed) rate cuts. Recent data has led traders to dismiss large rate cut bets for November, with the market now anticipating a 25 basis point reduction in the remaining policy meetings this year. Meanwhile, the European Central Bank (ECB) is expected to cut interest rates by 50 basis points by year-end, adding pressure to the Euro (EUR).
In Wednesday’s session, all eyes are on the Federal Open Market Committee (FOMC) Minutes from the September meeting, which will provide insights into the Fed’s economic outlook. Notably, all members, except Governor Michelle Bowman, supported a 50-bps cut, signaling a shift towards easing.
The Euro is under pressure due to expectations of further rate cuts from the ECB, as inflation rates continue to decline and economic vulnerabilities persist in the Eurozone. ECB officials, including Yannis Stournaras and Martins Kazaks, have backed additional cuts, reinforcing the sentiment for a weaker Euro.
Technically, EUR/USD remains vulnerable, having broken down from a Double Top pattern on the daily chart. The 14-day Relative Strength Index (RSI) indicates potential further weakness, with immediate support seen around 1.0900, while resistance is expected near the 20-day EMA at 1.1090 and the September high around 1.1200.
