Pound-Australian Dollar could strengthen if UK inflation boosts BoE rate expectations, while a risk-off mood may keep the Aussie under pressure. The Pound Australian Dollar (GBP/AUD) exchange rate wavered near the previous day’s 12-day high on Tuesday, as a risk-off mood subdued the ‘Aussie’ and markets digested the UK’s latest jobs report.
At the time of writing, GBP/AUD was trading at AU$1.8904, virtually unchanged on the day.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.347346 (-0.20%)
Australian Dollar to Dollar (AUD/USD): 0.712897 (-0.12%)
DAILY RECAP:
The Pound (GBP) was unsure on Tuesday as markets reacted to the latest UK labour market overview.
On the surface, the data showed broad stability in the British jobs market in the three months to July. Unemployment held steady, rather than rising as forecast, while wage growth printed in line with expectations.
However, some economists pointed out signs of underlying weakness below the headline figures.
In addition, concerns about surging UK bond yields pressured the Pound, amid fears that rising government borrowing costs could lead to tax hikes, spending cuts, and slower growth.
Meanwhile, the Australian Dollar (AUD) was subdued on Tuesday as a risk-averse market mood continued to dampen demand for the risk-sensitive currency.
Investors have grown increasingly concerned about the crisis in the Middle East this week as tensions escalate. Yemen’s Houthi rebels tightened their control over a key shipping route, while Saudi Arabia blamed Iraqi militants for an attack on a key oil pipeline.
Energy prices have surged as the conflict widens, raising fears about the impact on the global economy.
Near-Term GBP/AUD Forecast: UK Inflation to Support Sterling? Looking ahead, Wednesday brings the UK’s latest consumer price index, which could support the Pound.
Markets expect the CPI to show that price growth accelerated in August. Headline inflation is forecast to have risen from 2.9% to 3.1%, while core inflation is set to have increased from 2.6% to 2.7%.
If inflation accelerated last month – before this month's surge in oil prices – it could boost bets that the Bank of England (BoE) may consider raising interest rates sooner than expected.
However, a small rise in inflation may not be enough to move the needle on BoE bets ahead of the bank’s decision on Thursday.
As for the ‘Aussie’, global risk dynamics could drive the currency. If markets remain decisively risk-off, AUD could struggle.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
Key Points:Fed guidance could determine the next move in gold and silver.Gold could fall towards $4,160 if it breaks below $4,250.Silver risks a decline towards $60 if support at $62.60 fails.
In this article:Gold
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Silver ForecastGold (XAU) remained under pressure on Wednesday ahead of the Federal Reserve’s interest rate decision. Spot gold slipped to around $4,261, while silver was more resilient and remained above $62.55. The U.S. dollar rose to 99.60 and the 10-year Treasury yield remains strong near 5%, which is the highest since 2007. Higher yields make gold and silver less attractive investments as they don’t pay interest.
Oil was an additional source of pressure. Brent oil remained strong at $110, while the WTI oil price broke the resistance of $104 as Saudi export loadings were suspended and Libya halted operations at three oil fields. The surge in oil prices renewed inflation fears again and pushed the expectations of a 25 basis point Fed rate hike to over 94.5%.
The Fed will make the interest rate decision on Wednesday and update economic projections. In my view, the guidance on future rate hikes will be more significant than the expected rate hike. A hawkish tone could extend pressure on both metals and softer guidance may support a recovery.
Gold Price Forecast: A Break Below $4,250 Could Expose $4,160 XAU/USD Daily Chart: $4,160 Support and $4,530 Resistance The daily chart for spot gold shows that the price has been consolidating between the 50- and 200-day SMAs in the $4,275-$4,530 area. This consolidation shows uncertainty in the short term. But the RSI has broken below the midline, which indicates negative price action in the short term.
The price has been trading within the ascending broadening wedge pattern since the December 2024 lows. The immediate support remains at $4,160. A break below this level will likely open the way for further downside towards the $4,000 area.
On the other hand, a recovery above $4,530 will open the way for a strong rally towards the $4,800 region.
The short term price action is confined within the triangle pattern as seen in the chart below. This range lies between $4,150 and $4,530. A break from this triangle will likely define the next move in gold.
Gold 4-Hour Chart: Head and Shoulders Signals Breakdown Risk The 4-hour chart for spot gold also shows that the price is consolidating near the $4,300 level in the short term. A confirmed break below $4,250 will likely confirm the breakdown and open the way for further downside to $4,160. This negative price action is defined by the head and shoulders pattern, which formed in August 2026.
Silver Price Forecast: A Break Below $62.60 Could Open the Way to $60 XAG/USD Daily Chart: $62.60 Support and $72 Resistance The daily chart for spot silver (XAG) also shows strong consolidation between the 50- and 200-day SMAs in the $62.60-$72 range. A break from these levels will likely define the next move in the silver market. The RSI has moved below the midline, which indicates negative price action despite strong support at the 50-day SMA.
The price formed negative price action during the first week of August. This indicates that a break below $62.60 will likely trigger strong drop towards the $55 region. On the other hand, a break above $72 will negate the bearish outlook and open the way for further upside.
Silver 4-Hour Chart: $60 Support and $65.50 Resistance The 4-hour chart for spot silver shows that the price has consolidated above $62.60 over the past two days and shows strong consolidation around this level.
This level is defined by the 50-day SMA on the daily chart. A break below $62.60 will likely open the way for $60 as the first immediate support. On the other hand, $65.50 is the initial resistance in the spot silver market.
What Is Next for Gold and Silver Prices? Gold and silver remain vulnerable ahead of the Fed decision. Higher yields and a stronger dollar reduce their appeal while rising oil prices add to the fears of inflation. The guidance from the Fed will likely shape the next move as a hawkish tone could extend selling pressure. Gold risks a decline towards $4,160 if it breaks below $4,250.
Silver could fall towards $60 if support at $62.60 fails. The softer guidance by the Fed could support a rebound in both metals by easing expectations for further rate hikes. In my view, both metals need to break above key resistance levels before the sustained recovery becomes more likely.
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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
TL;DR: One Fed hike is effectively certain today, but markets are pricing four hikes total at an approximately quarterly cadence—whether the SEP validates that path, or its hawkish tail, will decide whether EUR/USD extends below 1.1471 or reverses back through 1.1653.
Markets Have Moved Beyond Today’s Hike One Fed hike is effectively certain. The other three are where the risk lies. If officials validate the market’s 100bp tightening path—or its hawkish tail—EUR/USD has room to extend below 1.1471. If they undershoot it materially, 1.1653 becomes the level that separates a temporary bounce from a genuine reversal.
Fed funds futures indicate investors are pricing four 25bp hikes in total over the next several quarters, including today’s expected move. The modal terminal range reaches 4.50–4.75% around June 2027 and then holds near that level through the end of the year. That plateau matters because it suggests the market is pricing a completed tightening cycle rather than a policy rate still moving continuously higher.
Probability-weighted OIS pricing produces an expected rate around 4.52–4.55% by mid-2027, broadly consistent with the futures distribution. This is another representation of the same short-rate market rather than an independent confirmation, but the two measures point toward a similar endpoint.
The US two-year Treasury yield around 4.65% provides a separate consistency check. The cash yield reflects the average expected policy rate over its maturity, plus term premium and other adjustments, so it can’t independently identify the terminal rate. Nevertheless, it’s consistent with a policy path that stays elevated as tightening extends into 2027.
The important distinction is therefore that today’s hike is the first move in a four-hike path, not a standalone event.
The Priced Cadence Is Approximately Quarterly The market isn’t expecting four consecutive hikes. OIS probabilities alternate between meetings with relatively high and low tightening risks, concentrating the likelier moves around September, December, and March, with intervening meetings more likely to be skips.
That produces an approximate one-hike-per-quarter cadence. It implies a measured cycle in which the Fed raises rates, assesses the economic response, and then tightens again if inflation and activity continue to justify it.
This distinction matters for EUR/USD. A projection showing further hikes without suggesting consecutive moves could still validate the market’s broader Dollar-supportive path. The Fed doesn’t need to promise an aggressive meeting-by-meeting campaign to endorse the 100bp total.
The Four-Hike Path Isn’t a Hard Ceiling The futures distribution also contains a meaningful hawkish tail. Around 19% probability is assigned to a fifth hike and a 4.75–5.00% range by December 2027. A further approximately 7% is distributed across outcomes above 5.00%.
That gives a combined 19–26% tail risk above the four-hike base case. If the updated projections point toward either a faster cadence or a terminal rate above 4.75%, the Fed would validate a scenario currently treated as possible but not central. Such an outcome would deliver a larger Dollar catalyst than today’s expected decision itself.
The SEP Must Validate Both Timing and Destination The June SEP produced a median year-end 2026 rate of 3.8%, broadly consistent with one hike during the year. Nine of the 18 officials submitting projections expected at least one increase. Three policymakers subsequently dissented in favor of tightening at the July meeting, up from two in June, keeping the risk of a higher median firmly in play.
The September projections now face two separate tests. The 2026 median will show whether officials expect another hike after today, potentially in October or December. The 2027 median will indicate whether the committee is moving toward the market’s broader 4.50–4.75% terminal range.
Federal Reserve Chair Kevin Warsh is expected to withhold his individual projection again, consistent with the position he adopted in June. The number of other participants submitting dots will therefore matter. Any further abstentions would thin the sample and make movement in the median less informative than usual.
Warsh’s press conference will be equally important. The dots may reveal the intended destination, but his guidance will determine whether markets interpret a lower projection as a gradual tightening path or a genuine rejection of additional hikes.
ActionForex’s Technical View on EUR/USD: Breaking Its Daily Moving Average EUR/USD enters the decision with a mild downside bias. This week’s break below the daily 55-day EMA strengthens the case that the rebound from 1.1323 to 1.1710 completed as a three-wave corrective structure rather than the beginning of a new impulsive advance.
Daily MACD has turned lower, while RSI has fallen to around 42, leaving room for further weakness before oversold conditions emerge. On the four-hour chart, price is also below its moving average, with MACD in negative territory and RSI near 38.
The weekly picture is less decisively bearish. Weekly RSI stands near a neutral 48, while MACD remains below zero but above its signal line. The higher timeframe therefore provides no oversold floor, but it hasn’t yet confirmed a larger bearish reversal. The immediate downside case is being driven primarily by the daily and four-hour structures.
The first target is the 61.8% retracement of 1.1323 to 1.1710 at 1.1471. A decisive break would expose the stronger 1.1353–1.1323 support zone, formed by the July low and the long-term 38.2% retracement of the rise from 1.0176 to 1.2081.
Four SEP Outcomes, Four Technical Tests SEP outcome EUR/USD confirmation Market interpretation Exceeds the priced path Break of 1.1471, followed by 1.1353–1.1323 Hawkish tail above four hikes becomes a central risk Validates four-hike pricing Initial test of 1.1471 Downside bias continues, but sell-the-fact volatility is possible Mildly undershoots Recovery stays below 1.1653 Dollar pullback without confirmation of a EUR/USD reversal Deeply undershoots Break of 1.1653, followed by 1.1710 Market reprices the Fed path materially lower These levels should confirm the interpretation rather than be treated as automatic outcomes. Because much of the tightening path is already priced, even an SEP that broadly validates four hikes could produce a limited Dollar reaction or an initial sell-the-fact move.
Similarly, a modestly lower dot plot wouldn’t complete a EUR/USD reversal by itself. A break of 1.1653 is required to indicate the fall from 1.1710 has ended. A subsequent move through 1.1710 would confirm the broader rebound is resuming.
The Dot Plot, Not the Hike, Holds the Answer EUR/USD already reflects competing Fed and ECB tightening expectations. The immediate question is whether the Fed’s updated projections preserve a sufficiently stronger US path to extend the pair’s decline.
A break of 1.1471 would show the SEP had reinforced the current Dollar advantage. A fall through 1.1353–1.1323 would require a more substantial hawkish surprise and would carry larger structural implications. Conversely, a recovery through 1.1653 would indicate the Fed failed to meet what markets had already priced.
Today’s hike was never the central uncertainty. The decision lies in whether the Fed validates the remaining three moves, their approximately quarterly cadence, and the tail risk beyond them.
Key Takeaways Markets price four total 25bp hikes at an approximately quarterly cadence (September, December, March), with a modal terminal range of 4.50-4.75% by mid-2027. A combined 19-26% tail risk sits above the four-hike base case, meaning a faster cadence or a terminal rate above 4.75% would deliver a bigger catalyst than today’s hike itself. The September SEP faces two tests: whether the 2026 median rises above 3.8% (signaling another hike this year) and whether the 2027 median moves toward the market’s 4.50-4.75% terminal range. Warsh is expected to withhold his individual projection again, making the participation count and his press conference guidance as important as the median dot itself. EUR/USD’s first target is 1.1471; a break opens 1.1353-1.1323, while a recovery through 1.1653 and then 1.1710 would instead signal the Fed undershot priced expectations.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
Gold struggled to start a fresh increase and remained below $4,450. A bearish trend line is forming with resistance at $4,355 on the 4-hour chart. WTI Crude Oil extended gains and remains supported above $100. EUR/USD started a fresh decline and traded below 1.1580. Gold Price Technical Analysis Gold failed to surpass $4,500 and corrected gains against the US Dollar. The price dipped below $4,450 and even retested the $4,250 support zone.
The 4-hour chart of XAU/USD indicates that the price settled well below $4,450, the 100 Simple Moving Average (red, 4 hours), and the 200 Simple Moving Average (green, 4 hours). On the upside, immediate resistance could be $4,350 and the 23.6% Fib retracement level of the downward move from the $4,510 swing high to the $4,253 low.
There is also a bearish trend line forming with resistance at $4,355. The next major resistance might be $4,380 and the 200 Simple Moving Average (green, 4 hours).
A clear move above $4,380 could open the door for more upside. In the stated case, the bulls could aim for a move toward $4,450 and the 100 Simple Moving Average (red, 4 hours).
Any more gains might send the price toward the $4,500 level. If there is a fresh decline, the price could test $4,220. The first major support sits at $4,200. The next support could be $4,165, below which the price might slide to $4,120. The main support sits at $4,000.
Looking at WTI Crude Oil, the price remained in a positive zone, and the bulls might aim for a larger move to test $110.00.
Economic Releases to Watch Today
UK Consumer Price Index for Aug 2026 (YoY) – Forecast +3.1%, versus +2.9% previous. UK Core Consumer Price Index for Aug 2026 (YoY) – Forecast +2.7%, versus +2.6% previous. Fed Interest Rate Decision – Forecast 4.0%, versus 3.75% previous. Fed Monetary Policy Statement.
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The Japanese yen strengthened rapidly earlier this month despite a relentless rise in US nominal and real yields, an outcome that has been almost unheard of in modern times.
GBP/USD is showing signs of stabilising near support as traders prepare for a potentially volatile combination of UK inflation data and the Federal Reserve decision. Rising expectations for a BoE hike later this year could support sterling, particularly if UK CPI surprises higher or the Fed falls short of increasingly hawkish market expectations.
Spot gold daily chart shows larger trend structure. Source: TradingView Having said that, a deeper test remains possible, with potential support near the lower swing high of $4,203 potentially being reached before the current bearish retracement completes. It defines another prior resistance level that may yet be tested as support before the current decline is complete. There is also the 78.6% Fibonacci retracement at $4,146 that may be tested as well. Consequently, a sustained decline below that retracement zone would lower the potential for a recovery and increase the risk of a decline below the July low of $3,942.
Bearish Pressure Meets a Developing Decision Point The recent failure to sustain a rise above both the downtrend line and the 200-day moving average, followed by weakness, shows that the broader bearish trend continues to exert its influence. Until there is another recovery and additional signs of strength to counter the bearish implications, gold remains under pressure and at risk of further downside.
In addition to remaining below those two trend indicators, it is also below the long-term uptrend line and short-term rising trendline. However, those three lines are now beginning to converge, suggesting that the current period of pressure may be approaching an important decision point. A successful hold of the current support zone followed by renewed strength could therefore provide the first indication that momentum is beginning to turn, while a breakdown would reinforce the bearish outlook.
Traders expect that rising oil prices will force the Fed to start the new rate hike cycle. According to FedWatch Tool, the probability of a rate hike increased to 92.5%.
The yield of 10-year Treasuries climbed above the 5.01% level as bond traders waited for Fed decision. Rising yields put some pressure on gold, but traders were not ready for big moves ahead of the key event of the week.
U.S. dollar moved higher against a broad basket of currencies as forex traders bet on hawkish Fed. Stronger dollar served as a negative catalyst for gold in today’s trading session.
From the technical point of view, gold continued its attempts to settle below the 50 MA at $4275. If gold manages to settle below the 50 MA, it will head towards the next support, which is located in the $4160 – $4180 range. On the upside, a move above the $4320 level will open the way to the test of the $4400 level.
Silver Attempts To Rebound Ahead Of Tomorrow’s Fed Decision
A Fed hike is already heavily priced in, leaving its message on further tightening crucial to ING's near-term Euro forecast. The Euro to US Dollar exchange rate (EUR/USD) slipped to 1.1540 on Tuesday, leaving ING's short-term target of 1.150 around 40 pips away.
Latest — Exchange Rates:
Euro to Dollar (EUR/USD): 1.1541 (-0.06%)
Pound to Dollar (GBP/USD): 1.347191 (-0.22%)
Dollar to Yen (USD/JPY): 155.08324 (+0.44%)
Monday's 0.44% decline accounted for most of the pair's roughly 0.5% fall since Friday's close, as higher US short-term yields, expensive oil and weaker risk appetite supported the Dollar.
ING sees scope for the move to extend if Wednesday's Federal Reserve decision reinforces those pressures.
Its models put EUR/USD near fair value, with a slight bias towards undervaluation, but the bank says equities and short-term interest rates currently exert a particularly strong influence.
ING's Francesco Pesole warns that "a risk-off, hawkish hike by the Fed tomorrow could easily take the pair to our 1.150 short-term target."
Image: EUR to USD rate 48hr chart The Fed's guidance matters beyond September Futures put the chance of a September hike at around 93% early Tuesday, following the stronger monthly US core inflation reading that helped shift expectations last week.
We think further Dollar gains will depend heavily on whether the Fed encourages markets to price additional hikes beyond September.
A cautious message could instead limit the currency's advance, even if policymakers raise rates.
BNP Paribas also expects initial Dollar strength, with a separate year-end EUR/USD forecast of 1.14.
"We expect Fed hikes to temporarily offset structural headwinds and support the dollar. EUR/USD would target 1.14 by end-2026, before the dollar's structural downtrend resumes toward 1.20 by end-2027, although political and fiscal risk may weigh on the euro next year."
For the immediate outlook, ING also identifies improving Gulf news as a potential trigger for a Dollar pullback.
An easing of the oil shock would reduce one source of pressure on the Euro.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
The euro has started to face a more challenging period in the short term. The EUR/USD pair has already declined by nearly 0.81% over the last four trading sessions, a move that has begun to reinforce a meaningful bearish bias in favor of the U.S. dollar.
The USD/JPY managed to extend its recovery to around 155.00 this morning which is a pivotal technical and psychologically-important level. The pair has been recovering from a seven-month low, as US Treasury yields and oil prices have been pushing higher and investors position for a potentially more hawkish Federal Reserve on Wednesday.
The British Pound is holding long-running support with its weekly opening range intact into UK inflation, the Fed and the Bank of England. Michael Boutros, StoneX Media Senior Market Analyst, walks through a multi time frame look at sterling and maps the week's event calendar onto the levels that matter.
Gold Price Forecast: XAU/USD Levels to Watch After the Fed Decision Hawkish Fed Hike: Gold Could Fall Toward $4,250 Because gold pays no yield, higher interest rates increase the opportunity cost of holding it. A confirmed rate hike and hawkish guidance would raise real yields and strengthen the U.S. dollar, making gold more expensive for holders of other currencies, thereby pushing XAUUSD lower. The updated Summary of Economic Projections and Chair Warsh’s press conference will determine the trend. If the dot plot signals further rate increases in December or beyond, gold could fall towards $4,250. However, the ongoing geopolitical tensions in the Persian Gulf and elsewhere will provide buying support on dips and limit the losses.
Dovish Fed Hike: XAU/USD Could Rebound Toward $4,400-$4,450 If the Fed hikes by 25 basis points but delivers a dovish message, gold could experience a ‘buy the fact’ rally. If Warsh frames the hike as a limited adjustment and signals a pause, pressure on gold would ease. Yields could fall, and the dollar could drop, sending XAUUSD towards $4,400–4,450.
Fed Hold Scenario: Gold Could Rally Above $4,500 If the Fed unexpectedly holds rates, gold could rally sharply as the dollar weakens and Treasury yields drop.Holding rates is the least likely decision. Markets will almost certainly interpret it as a response to political pressure, and it will hurt the Fed’s credibility. Inflation expectations will rise, boosting the appeal of gold as a macro hedge and providing structural bullish support. Under this scenario, XAUUSD may ultimately rally above $4,500.
Bitcoin Price Forecast: BTC/USD Scenarios Around the Fed Decision Traditionally, BTCUSD trades in close correlation with technology stocks and other risk-sensitive assets. When the Fed increases interest rates, it effectively reduces liquidity by making cash and short-term bonds more attractive. Additionally, higher rates also strengthen the U.S. dollar, which naturally exerts downward pressure on Bitcoin because the BTCUSD pair is priced in greenbacks. Therefore, a sustained tightening signal from the Fed would create a persistent obstacle for digital assets.
Hawkish Fed Outlook: Bitcoin Could Test $75,000-$76,000 Under the base case scenario, traders should expect the Bitcoin price to decline, especially if the updated dot plot signals further rate increases in December and Chair Warsh delivers a hawkish press conference. Specifically, Bitcoin might test the support zone between $76,000 and $75,000 as bond yields rise and the dollar strengthens. If the Fed suggests that its decision is the start of a prolonged hiking cycle, crypto markets may experience broader selling pressure, and Bitcoin may drop towards $73,300.
Dovish Fed Signal: BTC Could Rebound Toward $79,500-$82,000 Under Scenario 2, in which the Fed delivers a limited rate increase and signals a pause in future hikes, Bitcoin may experience a sharp relief rally. If Chair Warsh describes the hike as a minor adjustment to manage energy-driven inflation, bond yields should fall, easing overall financial conditions. Under this outcome, Bitcoin could rise towards $79,500–82,000. Indeed, weak aggregate demand gives the Fed a good reason to sound cautious. The University of Michigan’s Surveys of Consumers said its Consumer Sentiment Index dropped to 47.8 in September, and diesel prices have hit depressing levels, hurting consumers’ morale. Markets would read the Fed’s caution as dovish and supportive for risk.
Fed Hold Scenario: Bitcoin Could Rally Toward $82,000-$84,000 A decision to keep rates unchanged would trigger a strong rally towards $82,000–84,000. Fed credibility will suffer, and Bitcoin would benefit not only from increased liquidity but also from renewed interest in non-sovereign assets. However, rising long-term inflation expectations might create price uncertainty in Q4 and leave the rally on shaky ground.
EUR/USD Forecast: Fed Guidance and Rate Differentials in Focus Hawkish Fed Guidance: EUR/USD Risks 1.1480 and Below The EURUSD exchange rate depends heavily on the relative gap in policy paths between the Fed and the European Central Bank (ECB). One-month EURUSD forward points are currently near 13.6–13.8 pips, which highlights a clear carry disadvantage for holding euros against dollars. A Fed rate hike would widen this interest rate differential further, supporting the dollar. However, because investors already overwhelmingly anticipate a 25-bps hike, it will be the economic projections and press conference that will determine the pair’s direction. Under the base case scenario, traders should expect EURUSD to drop towards 1.1480 as the rate gap widens. Signal projections of multiple additional hikes in 2026 could push the pair below 1.1450. The size of the move will depend on how hawkish the guidance is. In addition, an expected Bank of Japan rate hike on Friday could cause yen carry trade unwinds, adding further selling pressure on the euro.
Dovish Fed Pause Signal: EUR/USD Could Recover Toward 1.1645 If the Fed signals a pause after one rate increase, U.S. yields would drop, narrowing the rate gap. In this scenario, EURUSD could bounce back towards the 1.1600–1.1645 range.
Fed Hold Scenario: EUR/USD Could Jump Toward 1.1700 If the Fed holds rates, EURUSD could rally sharply, perhaps by as much as 100–150 pips, towards 1.1650–1.1700. A decision to keep rates unchanged would lower short-term yields in the U.S., broadly weaken the greenback, and raise questions about Fed independence and inflation-control credibility. Over the medium term, a hold could still hurt the euro if it lifts U.S. inflation expectations, but the immediate knee-jerk reaction will be very bullish.
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