European currencies are currently moving cautiously, shifting into a consolidation phase after their recent rally. Both EUR/USD and GBP/USD previously broke out of established ranges and moved higher, but a subsequent pullback has brought them back to retest the upper boundaries of those former sideways corridors. Holding near these levels signals a temporary balance between buyers and sellers, as traders adopt a cautious stance ahead of the Federal Reserve’s key decision.
Attention is firmly on the upcoming Fed meeting, including the rate announcement, policy statement, and press conference. Market participants are looking for clues about the future path of monetary policy, which is dampening trading activity and preventing a clear directional trend. At the same time, incoming macroeconomic data from the US, the eurozone, and the UK may also shape sentiment.
EUR/USD
EUR/USD is hovering near the breakout zone, maintaining positions above important support levels. This keeps the broader structure supportive of further gains, although the lack of fresh catalysts is limiting upward momentum for now. The Fed’s decision could act as a trigger for a move beyond the current range.
From a technical perspective, the pair may retest the 1.1750 level, supported by a bullish engulfing pattern visible on the daily chart. Conversely, a decisive drop below 1.1650 could open the way for a return into the prior trading range.
Key events for EUR/USD:
- today at 09:00 (GMT+3): speech by Bundesbank representative B. Balz;
- today at 18:30 (GMT+3): speech by Bundesbank Vice President Buch;
- tomorrow at 11:00 (GMT+3): Germany’s GDP release.
GBP/USD
GBP/USD is displaying a comparable setup, consolidating after a corrective decline and staying close to recent levels. This pause reflects ongoing uncertainty, with traders awaiting guidance from the Fed as well as signals regarding Bank of England policy. Depending on central bank communication, the pair could either regain upward momentum and secure a position above 1.3600, or extend its correction and slip below 1.3460.
Key events for GBP/USD:
- today at 17:00 (GMT+3): Atlanta Fed GDPNow estimate;
- today at 21:00 (GMT+3): Federal Reserve rate decision;
- today at 21:30 (GMT+3): FOMC press conference.
In summary, the market is currently balanced, with previously broken levels serving as a crucial decision area. The Fed’s announcement is likely to be the main catalyst: a dovish message may support further gains in European currencies, whereas a more hawkish stance could increase downside pressure and deepen the correction.
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