is consolidating near 1.1532 on Wednesday, with markets taking a wait-and-see stance ahead of the Fed's decision.
The Federal Reserve is widely expected to keep rates unchanged. Investor attention will be focused on Jerome Powell's comments, particularly how oil market volatility may influence the political outlook.
Rising energy prices are raising inflation risks, while labor market signals remain mixed and offer little guidance on rates. Markets do not expect policy easing before September or October and are currently pricing in only one rate cut before the end of the year.
Geopolitical tensions continue to weigh on confidence. Iran is stepping up attacks on the region's energy infrastructure, while US allies have not supported Donald Trump's call to ensure safe shipping through the Strait of Hormuz.
Technical analysis
On the H4 chart, EUR/USD is forming a consolidation range around 1.1536. An upward move towards 1.1600 is expected as a short-term target, followed by a possible pullback to 1.1539. Technically, the MACD supports this scenario: its signal line remains below zero but points firmly upward, indicating that bullish momentum is building.
According to the H1 chart, the pair is developing the next upward leg towards 1.1596. After reaching this level, a drop to 1.1530 is expected, followed by a further advance towards 1.1650. The stochastic oscillator confirms this structure, with its signal line above 50 and rising towards 80.
Conclusion
EUR/USD remains in a holding pattern ahead of the Federal Reserve's decision, with markets awaiting Powell's assessment on how oil market volatility may determine the direction of policy. With only one rate cut already priced in before the end of the year and tensions in the Middle East showing no signs of easing, the direction of the US dollar in the near term will depend on whether the Federal Reserve shows patience or greater concern about inflation.
Technical indicators point to scope for a near-term rally, although the broader trend will be determined by the tone of Wednesday's announcement.
Disclaimer
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
