- Euro price action remains sideways as traders await the FOMC decision, with core PCE meeting expectations.
- Questions persist about the scale of future rate cuts, and stronger U.S. economic signals could favor dollar strength despite support near 1.14.
The euro has risen slightly during the trading session on Friday, but really, at this point, it doesn't look like it's got anywhere to go. And I do think that we're starting to enter a bit of a holding pattern with the FOMC interest rate decision on Wednesday. We did have the core PCE price index numbers on Friday, and they came out at 0.2%, which is exactly as expected. At least the Federal Reserve doesn't have to worry about it being higher than expected.
So, traders are probably still counting on that interest rate cut. The real news will be the press conference after the interest rate cut and the guidance that Jerome Powell tries to give the marketplace. When you look at the overall trend right now, it is sideways. It has been somewhere around July 15 or so, and I think it really hasn't changed much other than we have fallen after the September FOMC meeting, and it does show that perhaps the market isn't quite as confident on a huge rate-cutting cycle as they had been previously. And therefore, it opens up the possibility of the US dollar strengthening.
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Potential for U.S. Dollar Strength
I also see a lot of indicators right now, leading indicators, proprietary leading indicators that suggest the United States is going to go quite a bit hotter and stronger than the rest of the world in early 2026. And we should see the US dollar pick up momentum as a result, especially against the euro. So, we'll have to wait and see. But 1.14 and the 200-day EMA underneath offer support. If we do break to the upside, as long as we stay below 1.18, it doesn't change much, at least not yet.
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