EUR/USD correctly corrected before the Fed decision

• The EUR/USD faces sales pressure about 1,0950 while the US dollar is strengthened waiting for the Fed monetary policy decision.
• The Fed is expected to maintain stable interest rates in the range of 4.25%-4.50%.
• The euro falls despite the fact that German leaders agreed to increase the indebtedness limit in the lower house of Parliament.

The EUR/USD abruptly falls below 1,0900 in the European session on Wednesday after registering a new maximum of five months about 1,0955 the previous day. The main currency pair weakens while the US dollar (USD) works strongly waiting for the decision on the Federal Reserve Interest rate (Fed) at 18:00 GMT. The US dollar index (DXY), which follows the value of the dollar against six main currencies, jumps to about 103.70 after reviewing a minimum of five months around 103.20 on Tuesday.

According to the CME Fedwatch tool, the Fed is almost sure of maintaining stable interest rates in the range of 4.25%-4.50%. This would be the second consecutive policy meeting in which the Fed will leave interest rates without changes.

The operators have maintained a growing confidence that the Fed will maintain the status quo on Wednesday, since the officials have been arguing in favor of maintaining an approach of “waiting and seeing” until they obtain clarity on the economic perspectives of the United States (USA) under the leadership of President Donald Trump.

Market participants expect Donald Trump’s tariff policies to result in a resurgence of short -term inflationary pressures, since the impact of the highest import tariffs will be assumed by US importers, who will transfer the impact to consumers.

Apart from the decision on the interest rate, investors will also focus on the Fed points graph, which shows the collective forecast of those responsible for policies on the perspectives of interest rates in the medium and long term. At the December meeting, Fed officials project two interest rate cuts in 2025.

What moves the market today: EUR/USD descends while German leaders approve the debt restructuring agreement

• A sharp drop in the EUR/USD from the maximum of five months is also driven by the low performance of the euro (EUR) in general on Wednesday. The euro falls despite the fact that German leaders approved the debt restructuring plan of the probable Frederich Merz Chancellor on Tuesday in Bundestag, with the aim of stimulating economic growth and increasing defense spending.
• Market participants hope that the end of German fiscal conservatism after more than a decade is inflationary and pro-process for the economy. Such scenario will force the European Central Bank (ECB) to be cautious with respect to the current monetary expansion cycle. The ECB has reduced interest rates six times since June 2024.
• In addition, investors expect the tariff agenda of US President Trump to accelerate price pressure in the eurozone. On Tuesday, the US Treasury Secretary, Scott Besent, confirmed in an interview with Fox Business that each country will receive a number on “April 2” that we believe represents its “tariffs.”
• In the Geopolitical Front, US President Trump and Russian leader Vladimir Putin agreed to look for the immediate fire of 30 days between Russia and Ukraine in energy and infrastructure objectives.
• “We agree on a high immediate fire in all energy and infrastructure, with the understanding that we will work quickly to have a complete fire and, ultimately, an end to this horrible war between Russia and Ukraine,” Trump said in a publication in Truth Social on Tuesday.

Technical Analysis: The EUR/USD corrects from 1,0950

The EUR/USD struggles to extend its rise above 1,0950. However, the long -term perspective of the main currency pair remains firm since it remains above the 200 -day exponential (EMA) mobile average, which is negotiated around 1,0660.

The pair was strengthened after a decisive breakdown above the maximum of December 6, 1,0630 on March 5.

The 14 -day relative force (RSI) index oscillates about 70.00, suggesting that a strong bullish impulse remains intact.

Looking down, the maximum of December 6, 1,0630 will act as the main support zone for the torque. On the contrary, the psychological level of 1.1000 will be the key barrier to the euros of the euro.