EUR/USD and GBP/USD Analysis | Dollar Stabilizes Ahead of Fed Decision

What to Know

• The US dollar has stabilized after earlier weakness, driven by shifting Fed rate-cut expectations.
• EUR/USD is stuck between 1.14 and 1.18, with price hovering near the 50-day EMA.
• GBP/USD faces strong resistance around 1.32, reinforced by both major moving averages.
• Markets are waiting for the December FOMC meeting to provide clarity on policy direction.
• A breakout in either pair could spark broader USD volatility across FX markets.

We have recently seen stabilization in the US dollar after earlier weakness, with markets focused on Federal Reserve rate-cut decisions. EUR/USD appears range-bound near key moving averages, while GBP/USD faces notable resistance levels and awaits a decisive breakout.

The US Dollar Overall

Over the last several weeks, we’ve seen the US dollar somewhat stabilize after initially strengthening for the last couple of months. The FOMC meeting in September has been the absolute depth of US dollar selling. And since then, it has picked up a little bit of value against most other currencies.

Ultimately, this is a situation where we are watching very closely whether or not the Federal Reserve is going to continue cutting. And if they do, the question, of course, will be how many times they are going to be able to cut. With that being said, the market continues to go back and forth with a lot of volatility and choppiness as they just don’t really know what to do with themselves, with the interest rate expectations not only coming out of Washington, DC, but also out of Europe and London.

EUR/USD

The euro has rallied slightly over the last couple of days, and Tuesday is another grinding type of upward session. That being said, the Euro is sitting right out of the 50-day EMA, which, of course, is an indicator that a lot of people will be watching. If the market can rally from here, the 1.17 level will offer resistance, and most certainly the 1.18 level will as well.

Ultimately, this looks like a market that is trying to find a range, perhaps with the 1.14 level at the bottom of it and the 1.18 level at the top. As the market is essentially right in the middle, there’s probably not a whole lot going on here for anybody other than short-term range-bound traders. However, if we get a bigger move in this pair, it probably will be seen in other USD-related markets as well.

GBP/USD

The British Pound is in a much more interesting spot. It finds itself at the 1.32 level, an area that has been supported and is now offering resistance. Further making it interesting is the fact that the 50-day EMA and the 200-day EMA indicators sit just above it and therefore offer a little bit of a barrier. If the market were to fall from here, the floor would be found near the 1.30 level, and on a rally, you could see the 1.3350 level offer a little bit of a barrier. 

With the way that the Pound is just “sitting here”, it is likely that the markets are waiting for some kind of external reason to move, perhaps the interest rate decision and press conference from the FOMC next Wednesday. Ultimately, this looks like a market that is waiting to make a bigger decision.

 

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