The EUR\/USD pair experienced a reversal, with gains erased following decisions by the Federal Open Market Committee (FOMC) and the release of US jobless claims data. Initially, the USD weakened after the Fed’s announcement but eventually strengthened as market participants considered the implications of a more hawkish projected rate path.<\/p>\n
The FOMC’s dot plot showed expectations for two further rate cuts in 2025 by a narrow majority, contrasting with market expectations. Additionally, only one cut is projected for 2026 rather than the previously anticipated three. Fed Chair Powell referred to the rate cut as a risk management action, in light of weak labour market data. Subsequent strong jobless claims data further bolstered the USD. Future data releases will influence rate expectations and the USD’s performance.<\/p>\n
Regarding the Euro, the ECB maintained interest rates, following a data-dependent approach. President Lagarde indicated that the disinflationary phase has ended, with negligible easing expected by 2026. Technically, EUR\/USD tested but failed to sustain above the 2025 high, reflecting USD strength. Buyers utilise trendline support for potential gains, while sellers anticipate a move towards the 1.16 handle.<\/p>\n
Upcoming economic events include Eurozone and US Flash PMIs, Fed Chair Powell’s speech, US Jobless Claims, and the US PCE report, all of which may impact market dynamics.<\/p>\n
The Federal Reserve’s recent guidance is proving more hawkish than we initially priced in. The dot plot indicates a narrow majority favouring just two more rate cuts in 2025, a significant shift from the market’s previous expectations. This recalibration is putting renewed strength behind the dollar, erasing earlier gains in the EURUSD pair.<\/p>\n
We are watching the US labor market data very closely for direction. While we saw weaker Non-Farm Payrolls in July and August of 2025, adding just 150k and 145k jobs respectively, last week’s jobless claims painted a different picture. The report for the week ending September 20th showed claims dropping to a solid 210,000, suggesting underlying resilience that supports the Fed’s cautious stance.<\/p>\n
On the other side of the pair, the European Central Bank appears to have finished its rate-cutting cycle for now. With President Lagarde noting that growth risks are balanced, the market is only pricing in a negligible 11 basis points of total cuts by the end of 2026. This ECB resolve contrasts with signs of economic softness, as the latest August Flash Manufacturing PMI for the Eurozone remained in contractionary territory at 48.5.<\/p>\n
This divergence between a surprisingly firm Fed and a stalling European economy suggests option traders should be prepared for a potential increase in volatility. The current uncertainty, especially ahead of this week’s key data, makes strategies like straddles or strangles appealing to play a significant move in either direction. Implied volatility could rise leading into the US PCE inflation report this Friday.<\/p>\n
From a technical standpoint, the upward trendline on the daily chart is the immediate battleground. We see this as a key level where bullish traders might sell put options to collect premium, betting the support will hold. A confirmed break below this line, however, would signal a shift in momentum and likely encourage traders to buy puts or initiate short futures positions targeting the 1.1600 level.<\/p>\n
This week’s US PCE data will be the most critical catalyst for our next move. We recall how sticky inflation was through late 2024, so the market will scrutinize the upcoming report for August 2025. Consensus expects Core PCE to print at 2.8% year-over-year, and any number higher than that would likely validate the Fed’s hawkish tone and could be the trigger for a significant dollar rally.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD reverses as USD strengthens post-FOMC, jobless claims; markets eye upcoming data for direction.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-31191","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31191","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=31191"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/31191\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=31191"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=31191"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=31191"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}