The euro has shown considerable intraday volatility against the US dollar, oscillating up and down before settling near the 1.18 level. This price area represents the upper boundary of the recent consolidation range, suggesting that market memory is playing a role. The market now waits to see whether price action aligns with expectations following the Federal Reserve’s recent rate cut — though lingering questions remain. Could the Fed’s decision signal deeper concerns about the state of the US economy?
As the saying goes, “When the US sneezes, the world catches a cold.” The latest price behavior could be an early sign of broader economic unease. After briefly rallying into the 1.19 handle, the euro quickly reversed during the prior session following the FOMC announcement, highlighting the lack of strong bullish momentum in Thursday’s session.
A breakdown from current levels would likely push EUR/USD back into its prior consolidation zone and potentially lead to a test of the 50-day EMA. Conversely, a break above Wednesday’s candle high would represent a strong bullish signal, likely opening the door for a move toward the 1.20 level.
In Conclusion
Historically, Fed rate cuts tend to weaken the US dollar and support risk assets. However, if investors interpret the cut as a sign of underlying economic fragility, the reaction can flip, strengthening the dollar instead. This dynamic leaves the pair at a critical juncture — traders should watch closely, as the next move could set the tone for the medium-term trend.