Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1800.
- Add a stop-loss at 1.1600.
- Timeline:1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1600.
- Add a stop-loss at 1.1800.
The EUR/USD exchange rate drifted upwards after the Federal Reserve meeting and after a series of statements from European Central Bank officials. It rose to 1.1692, continuing an uptrend that started on November 5 when it bottomed at 1.1463.
Fed and ECB Comments Lifts the Euro
The EUR/USD exchange rate held steady as the Federal Reserve delivered its interest rate decision on Wednesday. As was widely expected, the bank lowered rates for the third consecutive time, bringing the benchmark rate to between 3.50% and 3.75%.
Notably, the decision was not unanimous as three officials dissented, with Stephen Moran voting for a 50 basis points cut as he has done since he joined the bank. Austan Goolsbee and Jeff Schmid opposed a cut, possibly arguing that inflation has remained above the bank’s target for four years.
The dot plot pointed to one rate cut in 2026 and another one in 2027. However, this dot plot may not be accurate as the FOMC’s composition will change next year when Powell’s term ends. Trump has said that he will start interviewing potentially Fed officials this week, with odds on Polymarket favoring Kevin Hassett.
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The EUR/USD pair also firmed after Christine Lagarde hinted that the bank will likely lift growth forecast for the bloc, as companies and consumers have reacted positively to the recent rate cuts. She also noted that the bloc has done better than expected amidst key headwinds like tariffs and the ongoing war in Ukraine.
It will be the second consecutive time that the bank has raised the bloc’s economic growth, with the recent one in September boosting the estimate to 1.2% from that previous 0.9%. A boost in the bloc’s growth forecast will mean that the bank will have less urgency to cut interest rates.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD exchange rate has rebounded from a low of 1.1463 in November to the current 1.1692.
This rebound happened after the pair formed a small double-bottom pattern, a common bullish reversal sign. It has now flipped the 50-day Exponential Moving Average into a support, while the ADX indicator has pointed upwards.
The pair will likely continue rising in the near term as the US dollar softens amid the start of a mini quantitative easing (QE) policy. Such a move will push it to the next psychological level at 1.1800.
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