EUR/USD hovers around 1.1134 as the dollar pauses before the Fed’s policy decision, with traders eyeing December rate‑hike odds and ECB clues.

The euro‑dollar pair stayed around 1.1134 during U.S. trading hours on Wednesday, after a brief dip to 1.1113 – its lowest level since May 2025. The move reflects a pause in the dollar’s rally as markets await the Federal Reserve’s monetary‑policy decision due at 18:00 GMT.

Dollar index steadies ahead of the Fed

• The US Dollar Index (DXY) was near 102.33 after hitting a two‑week high of 102.49 earlier in the day.
• The Fed is broadly expected to keep the policy range at 3.75‑4.00% following a 25‑basis‑point hike in September.
• Traders price an 85% chance of a December rate hike on the CME FedWatch Tool, keeping the dollar’s upside potential alive.

Euro under pressure from broader risks

• ING analysts note that the euro remains at year‑low levels amid strong dollar momentum and an unresolved French budget crisis.
• Societe Generale strategists add that energy prices, fiscal concerns and social unrest have limited any bounce in the single currency.
• If the Fed’s message sustains expectations of a December hike, the euro could stay vulnerable unless the ECB adopts a markedly hawkish stance.

What traders will watch next

• The ECB’s decision on Thursday, where a hold at the 2.50% deposit rate is expected, will be scrutinised for hints of a December hike.
• Mid‑term election‑related geopolitical tension in the Middle East could keep oil prices volatile, feeding inflation worries.
• Any deviation from the consensus Fed outlook could shift the dollar‑euro bias and reshape short‑term price action.

Related news

• Jeff Gundlach questions Fed's rate pause on CNBC
• Fed holds rates steady, bitcoin barely moves as December hike looms
• Gold slips toward $4,000 as oil above $100 clouds Fed outlook
• Obr downgrades uk growth forecast for 2027 despite healey budget

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This article is compiled from international market news for information only. It is not investment advice.