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The Fed Has Opened the Door to Rate Cuts, Euro Targets 1.2000
Forex
Summary:
The Federal Reserve has cut interest rates by 25 basis points in its latest decision and signaled potential for further reductions, which may weigh on the U.S. dollar and lead to its weakening.
Buy
CLOSEDEURUSD
End Time
1.18301
Entry Price
1.19600
TP
1.17600
SL
1.17928 -0.00205 -0.17%
701
Points
Loss
1.17600
SL
1.17599
CLOSING
1.18301
Entry Price
1.19600
TP
Fundamentals
Today, the Federal Reserve lowered the federal funds target rate by 25 basis points to 4.00%-4.25% during this meeting. Both the statement and economic projections hinted at further room for rate cuts in the future, citing concerns that recent weakness in employment necessitates "a faster easing" to prevent further deterioration in the labor market. The market interpreted this move as the Fed "officially opening the door to rate cuts," implying that short-term U.S. interest rates and real yields will decline, which is directly positive for euro-denominated assets.
Following the Fed's announcement, U.S. Treasury yields generally declined (with the 10-year yield falling to around the 4.0% level), reducing the attractiveness of the U.S. dollar to capital and boosting the risk premium for EUR/USD. Moreover, if the Fed clearly signals a path of quarterly rate cuts for this year, the neutral appeal of the U.S. dollar will be further weakened. This will increase the motivation to allocate to non-U.S. currencies in forex positions. At the same time, market institutions are adjusting their expectations accordingly (some major banks have moved their next rate-cut forecast forward to October), leading to a short-term capital flow bias toward risk assets and higher-yielding eurozone assets.
Technical Analysis
Based on the weekly chart, the EUR/USD pair briefly broke above 1.1900 yesterday but faced selling pressure and pulled back. It found support at the 1.1780 level today, where it bottomed out and rebounded. Currently, resistance stays in the 1.1780–1.1900 range. A decisive breakout, followed by confirmation through a pullback, could mark a turning point for short- to medium-term bulls, with further upside targeting the 1.2000 level. On the downside, the first key support is at 1.1780; a break below this level could see the pair decline toward the 1.1730–1.1710 zone.
Trading Recommendations
Trading direction: Buy
Entry price: 1.1820
Target price: 1.1960
Stop loss: 1.1760
Valid Until: October 02, 2025, 23:00:00
Support: 1.1780/1.1730
Resistance: 1.1918/1.2000
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