EUR/USD Price Today: Euro Holds 1.1733, Eyes 1.1800 Breakout

EUR/USD Price Today: Pair Holds Above 1.1720 as Fed Cut Looms

The EUR/USD exchange rate is holding near 1.1733, after testing lows of 1.1720 earlier in the session. The euro has regained momentum following last week’s turbulence around France’s debt downgrade, while the U.S. dollar remains on the defensive ahead of the Federal Reserve’s policy decision. Despite the uncertainty, the pair has consolidated in the 1.1720–1.1750 range, with traders reluctant to commit ahead of Wednesday’s announcement.

Fed Rate Outlook and Dollar Weakness Shape EUR/USD

Markets are pricing in a 25-basis-point Fed cut with more than 90% probability, while some models still account for a 12% chance of a 50-point move. Softer U.S. jobs data, including initial jobless claims climbing to 263,000—the highest since June 2023—has reinforced expectations of easing. Meanwhile, inflation remains mixed: August consumer prices rose 0.4% month-on-month and 2.9% annually, slightly above expectations. With President Trump openly pressuring for deeper cuts, markets are leaning toward a dovish outcome, which could weaken the dollar further and push EUR/USD toward resistance.

ECB Policy Divergence and Lagarde’s Optimism Support the Euro

The ECB last week held its deposit rate steady at 2.00%, signaling confidence in the region’s outlook. President Christine Lagarde stressed that risks to growth are more balanced and noted progress on disinflation. Traders have scaled back bets on additional ECB cuts, with odds for further easing before spring now below 40%. This divergence against a Fed that is set to cut rates gives the euro a relative advantage, helping EUR/USD stay supported above 1.1700 despite broader political headwinds in Europe.

Impact of France’s Downgrade and Eurozone Bond Yields

Fitch’s downgrade of France’s sovereign rating from AA- to A+, the weakest from a major agency on record, initially pressured the euro. Political turmoil, with François Bayrou’s resignation and Sébastien Lecornu’s appointment as Prime Minister, added to volatility. Yet the damage has been contained, with French 10-year yields climbing to 3.5% and the 30-year rising toward 4.33%, still below early September peaks that triggered heavier euro selling. Investors now see the Fed’s stance as more decisive for near-term EUR/USD than European credit dynamics.

Technical Outlook: Support at 1.1700, Resistance at 1.1780–1.1830

From a technical perspective, EUR/USD remains inside a bullish channel that has guided price action since early September. Key support lies at 1.1700–1.1720, reinforced by the 50-period EMA at 1.1720 and the 200-period EMA at 1.1690. To the upside, resistance is clustered at 1.1756, then 1.1780–1.1790, with the channel top converging near 1.1830. Momentum remains cautiously positive: RSI is at 53–56, showing neither overbought nor oversold conditions, while MACD lines are preparing for a potential bullish cross. A break above 1.1800 would open room toward 1.1830–1.1900, while failure to hold 1.1700 risks a slide back to 1.1660.

Market Sentiment: Rangebound Until Fed Decision

With no major Eurozone data releases and only ECB speakers Lagarde and Schnabel on the agenda, traders are focused almost exclusively on the Fed. University of Michigan sentiment last week showed a sharp deterioration, falling to a four-month low as tariffs drove consumer pessimism. This adds to the narrative of a slowing U.S. economy, giving the Fed cover to cut. However, if Powell delivers a cautious tone in his press conference or signals limited easing ahead, the dollar could rebound, keeping EUR/USD capped below 1.1800.

Strategic View: Buy, Sell, or Hold EUR/USD

Balancing the data, EUR/USD sits at 1.1733, with markets leaning bullish but hesitant. A confirmed Fed cut alongside dovish forward guidance would favor a breakout above 1.1780–1.1800, opening the door toward 1.1830–1.1900 in the short term. Conversely, a surprise hawkish stance or weaker ECB commentary could drag the pair back to 1.1660. Given the strong technical base and ECB-Fed policy divergence, the bias for EUR/USD is Buy, targeting 1.1800–1.1830 near-term, provided 1.1700 holds firm as support.

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