Insights 
VT 
The Euro’s recent recovery against the US Dollar ended as it fell to 1.1630 from a high of 1.1670. Traders are cautious, awaiting the Federal Reserve’s upcoming interest rate decision. The slowdown in Spain’s Q3 GDP, to 0.6% compared to the prior 0.7%, along with a dip in retail consumption, could pressure the Euro further.
The US Dollar lacks momentum ahead of the Federal Reserve’s policy announcement. A 25 basis point rate cut is expected, and traders are keenly observing Fed Chair Jerome Powell’s statements for clues about future monetary easing. The Fed’s signal on ending its Quantitative Tightening program is also highly anticipated. Meanwhile, the ECB is expected to maintain its current monetary policy.
Technical Analysis Of Eur Usd
Technically, EUR/USD’s attempt to rally has faltered, with the pair struggling around 1.1670. Key support is near 1.1615. A drop below this level could encourage further selling towards the October lows. Resistance is around the recent high of 1.1670, and a breach could push the pair towards 1.1730. The market remains fixated on the Fed’s decision and subsequent policy statement, which have considerable potential to influence the currency markets.
With the Federal Reserve’s rate decision just hours away, the market is positioned for a 25 basis point cut, which is largely priced into the current EUR/USD level. The real opportunity for traders will come from Chairman Powell’s forward guidance, as futures markets are already showing a 91% probability of another cut in December. We see this as a classic “buy the rumor, sell the fact” scenario unless Powell signals an even more aggressive easing path.
Recent economic data gives us reason to expect a dovish tone from the Fed, justifying the market’s lean. The last Non-Farm Payrolls report showed job creation slowing to 145,000, while the most recent GDP figures for the third quarter of 2025 came in at a softer 1.9%. These figures suggest that the aggressive rate hikes we saw back in 2022 and 2023 are finally cooling the economy, giving the Fed room to continue cutting.
Derivatives And Market Strategy
For derivative traders, this uncertainty creates a prime environment for volatility strategies. We are seeing increased interest in at-the-money straddles on the EUR/USD, which would profit from a significant price swing in either direction following the announcement. If Powell is unexpectedly hawkish, the dollar could rally, whereas a confirmation of more cuts could send it lower, making this a play on the magnitude of the move, not its direction.
Looking back, the rapid hiking cycle that took the Fed Funds rate above 5% in 2023 was designed to curb high inflation. Now, with the latest CPI data from September 2025 holding at a more manageable 3.1%, the Fed is in a phase of policy normalization. This pivot from tightening to easing is a multi-month trend that we expect to continue into early 2026.
On the other side of the currency pair, the Euro has its own challenges that may cap any significant rally. The unexpected slowdown in Spain’s Q3 GDP, coupled with Germany narrowly avoiding a recession last quarter, suggests the European Central Bank will be reluctant to adopt a hawkish stance. With the ECB deposit rate at 2%, the policy divergence still favors the US Dollar on a yield basis, even with today’s expected cut.
Therefore, we are watching key technical levels to structure derivative trades around the Fed’s announcement. A decisive break below the 1.1615 support area would likely see an increase in put option volume, targeting the 1.1576 level. Conversely, a dovish surprise could push the pair through the 1.1670 resistance, and traders holding call options with strikes at 1.1700 or higher would be well-positioned.
