European currencies are showing weak dynamics and are entering a consolidation phase after their previous advance. Earlier, EUR/USD and GBP/USD broke out of their ranges and gained strength; But the subsequent correction prompted both pairs to retest the upper boundaries of their previously breached side channels. The current stability near these levels reflects the balance of power in the market and a wait-and-see attitude among participants before the key decision the Fed will make.
The main focus is on the Fed meeting, including the interest rate decision and accompanying statement and press conference. The market evaluates possible signals regarding the future course of monetary policy, which limits activity and restricts the formation of a directional movement. Additional influence may come from macroeconomic data from the United States, the Eurozone and the United Kingdom.
EUR/USD
EUR/USD is consolidating near the previously broken range, holding above key levels. This dynamic maintains a structure conducive to achieving greater gains; However, the lack of new drivers is hindering the development of upward momentum. The reaction to the Fed’s decision may provide the impetus for a breakout of the current range.
EUR/USD technical analysis indicates a possible retest of the 1.1750 level, as a bullish engulfing pattern has formed on the daily time frame. A strong move below 1.1650 could lead the pair to return to the previously broken range.
Key events for EUR/USD:
- Today at 09:00 (GMT+3): Word B. BALS of the German Bundesbank;
- Today at 18:30 (GMT+3): Speech by Vice President of the Bundesbank Buch;
- Tomorrow at 11:00 (GMT+3): Germany’s GDP.
GBP/USD
The GBP/USD pair is showing a similar structure, stabilizing near its levels after a corrective pullback. The current consolidation reflects market uncertainty, expectations of signals from the Federal Reserve, and expectations regarding Bank of England policy. Depending on the regulators’ speech, the pair may resume its advance and consolidate itself firmly above 1.3600, or deepen the correction and fall below 1.3460.
Key events for GBP/USD:
- Today at 17:00 (GMT+3): Atlanta Fed GDP Index;
- Today at 21:00 (GMT+3): US Federal Reserve interest rate decision;
- Today at 21:30 (GMT+3): FOMC press conference.
Overall, the market is at a point of equilibrium, with previously broken levels acting as a key decision area. The outcome of the Fed meeting could serve as a key driver: a more dovish tone could support continued bullish momentum in European currencies, while more hawkish signals could increase pressure and lead to a deeper correction.
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