The EUR/USD pair is trading near 1.1545 ahead of the Federal Reserve’s September policy decision, with markets focused on whether the central bank will deliver its first rate increase since 2023. Investors widely expect a 25-basis-point hike to 3.75%-4.00%, while the accompanying statement, economic projections and Chairman Kevin Warsh’s press conference could determine the dollar’s next move.

Fed Decision Puts EUR/USD Under Pressure

The Federal Open Market Committee is meeting September 15-16, with the policy statement scheduled for 18:00 GMT and the press conference following at 18:30 GMT. The July meeting left the federal funds target at 3.50%-3.75%, while three officials dissented in favor of a 25-basis-point increase.

Markets have since moved toward a rate-hike expectation as inflation remains above the Fed’s 2% objective. Reuters reported that traders had assigned roughly a 90% probability to a quarter-point increase before the decision.

The policy path beyond September is likely to matter more for EUR/USD than the initial hike itself. Higher U.S. interest rates can increase the relative appeal of dollar-denominated assets, potentially keeping pressure on the euro.

Inflation Keeps Rate Outlook Restrictive

Recent inflation data have strengthened the argument for maintaining tighter monetary conditions. Rising energy prices and persistent inflation concerns have increased pressure on policymakers, while the July FOMC statement said inflation remained elevated relative to the Fed’s 2% goal.

ABN Amro characterizes the expected move as an inflation-risk management step rather than evidence of an extended tightening cycle. The bank expects another hike in December but stresses that future decisions will depend on how inflation develops.

That distinction leaves EUR/USD highly sensitive to forward guidance. A signal that additional hikes could follow would reinforce the dollar, while a one-off move accompanied by cautious guidance could limit further euro losses.

• Fed decision: Expected 25 bps
• New target range: 3.75%-4.00%
• Key EUR/USD support: 1.1500
• Immediate resistance: 1.1590

EUR/USD Technical Levels in Focus

EUR/USD remains below its 20-day exponential moving average near 1.1590, preserving a mildly bearish short-term structure. The Relative Strength Index (RSI) is around 43, indicating weaker momentum without reaching oversold territory.

A sustained daily close above 1.1590 would reduce immediate downside pressure and put the pair on a firmer recovery path. Conversely, a decisive break below the psychological 1.1500 level would expose the pair to deeper losses and make that level a central reference for traders.

Scotiabank describes the technical setup as neutral to bearish, noting the recent deterioration in RSI momentum.

For traders, the Fed’s rate decision and Warsh’s guidance are therefore critical. The 1.1500 area remains the main downside reference, while 1.1590 defines the first technical hurdle for any recovery.

Conclusion:

EUR/USD enters the Fed decision near 1.1545 with monetary policy and technical signals centered on two key levels. A break of 1.1500 would weaken the technical structure, while a move above 1.1590 would improve the near-term outlook. The Fed’s guidance on subsequent hikes could determine which level gives way first.