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08/05/25
15
EUR/USD Struggles Below 1.1300 Amid Fed’s Cautious Stance
The EUR/USD currency pair is facing challenges in maintaining stability above the 1.1300 level, having concluded Wednesday’s trading session significantly lower. Current market sentiment suggests that if the pair falls below the critical level of 1.1270, it may prompt further selling pressure.
On Wednesday, the Federal Reserve opted to hold the federal funds rate steady between 4.25% and 4.5% during its May meeting, a decision that was widely anticipated by analysts. The accompanying policy statement indicated that uncertainty regarding the economic outlook has intensified. While discussing the implications of this decision, the Fed Chairman highlighted an increase in near-term inflation expectations, largely attributed to tariffs. The central bank emphasized that they would need to adopt a wait-and-see approach before implementing any policy changes. Following this announcement, the market adjusted the likelihood of a rate cut in June, which dropped from approximately 30% to 20%, contributing to a strengthening U.S. dollar against other currencies, including the euro.
As market participants await key U.S. economic data due for release, Thursday will feature weekly Initial Jobless Claims alongside preliminary Unit Labor Costs for the first quarter, both of which could influence currency markets. A marked decline in jobless claims, with figures around 200,000, could bolster the dollar’s position, while a rise above 250,000 might exert downward pressure on the currency. However, the cautious approach of investors suggests that significant weakening of the dollar is unlikely in the wake of the Fed’s recent hawkish stance.
From a technical perspective, the Relative Strength Index (RSI) on the 4-hour chart remains below the neutral 50 mark, and EUR/USD has closed the last four 4-hour candles beneath the key Simple Moving Averages (SMA), indicating a bearish short-term outlook. Support levels are identified at 1.1270, 1.1175, and 1.1080, while resistance may be encountered at 1.1380, 1.1430, and the psychological barrier of 1.1500.
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