**EUR/USD Price Forecast: Sellers Pause Ahead of FOMC Minutes**
*Adapted and expanded from the original article by Pablo Piovano, FXStreet*
The EUR/USD currency pair showed a softer tone on Tuesday, stalling its recent downward momentum as market participants positioned themselves ahead of a key event: the release of the Federal Open Market Committee (FOMC) meeting minutes from the Federal Reserve’s latest monetary policy meeting.
This pause in the bearish trend came after a sustained multi-day decline driven by hawkish expectations from the U.S. central bank and stronger-than-expected U.S. economic data. As investors awaited insights from the Fed’s internal discussions, EUR/USD traded within a narrow range, reflecting a cautious market sentiment.
### Recent Performance and Technical Overview
EUR/USD had been on a three-day losing streak leading into Tuesday, which saw a mild rebound effort. However, this rebound proved limited as the pair remained capped below resistance levels, hinting that the broader bearish bias was still intact.
– The currency pair edged modestly higher during Tuesday’s European morning session.
– EUR/USD approached the 1.0600 psychological level after bouncing off recent lows.
– Although the selling momentum slowed, the market lacked sufficient bullish conviction to sustain a meaningful rally.
– Investors remained cautious ahead of the FOMC minutes, which could either reinforce hawkish Fed views or act as a catalyst for a corrective euro move.
### Influencing Factors: U.S. Economic Outlook and Fed Policy
A critical factor influencing the EUR/USD trend has been persistent strength in the U.S. dollar, bolstered by a resilient American economy. A series of recent data points have reinforced the perception that the Fed may need to keep interest rates elevated for a longer-than-expected timeframe.
Key drivers supporting the dollar:
– **Stronger-than-expected Payroll Data**: The robust Non-Farm Payrolls report for September showed continuing strength in the U.S. labor market.
– **Resilient Service and Manufacturing Output**: Recent ISM data indicated U.S. economic sectors are weathering monetary tightening better than anticipated.
– **Hawkish Fed Rhetoric**: Several Fed officials have echoed Chairman Jerome Powell’s sentiment that rates may remain high if inflation does not convincingly return to the 2% target.
As a result, yield differentials have leaned in favor of the dollar, particularly as rates on U.S. Treasury securities stay elevated. The 10-year Treasury yield hovered near multi-year highs, adding further pressure to the euro.
### European Economic Backdrop: Dovish ECB Outlook
While the dollar has benefited from solid economic fundamentals and a hawkish central bank, the euro has suffered from relative weakness in the Eurozone economic outlook.
Key points weighing on the euro:
– **Sluggish Growth Across the Eurozone**: Euro Area GDP data points to stagnation, with some member states even entering technical recession territory.
– **Inflation Dynamics Shifting Lower**: Headline inflation figures have eased significantly in the euro area, lowering the urgency for further ECB hikes.
– **Dovish European Central Bank (ECB) Tone**: Recent ECB communications signaled a pause or end to the current hiking cycle, especially as inflation continues to decelerate and weak demand persists.
This divergence in monetary policy trajectories between the Fed and ECB undermines euro strength and provides structural support to dollar appreciation.
### Technical Analysis: Levels to Watch
From a technical standpoint, EUR/USD continues to exhibit a bearish bias, although signs of temporary stabilization emerged on Tuesday.
Key technical observations:
– **Immediate Resistance**: The 1.0620 region remains a key barrier. A successful break above this level could open the way toward a stronger recovery, potentially testing the 1.0665 and then the 1.0700 regions.
– **Support Levels**: On the downside, the immediate support lies around the 1.0530-1.0550 zone. Any decisive move
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