EUR/USD Regains Footing as Fed Holds, Eyes 100-Day SMA Hurdle

EUR/USD caught a bid this week after the Federal Reserve opted to leave rates unchanged, deflating the greenback just as a second-quarter GDP miss highlighted cracks in US economic exceptionalism. The pair popped above a minor downtrend line, turning attention to a familiar ceiling that bulls have struggled to clear all month.

Fed Holds, Dollar Slides

The Federal Reserve’s decision to stand pat was widely expected but the accompanying tone, and the subsequent GDP data, reinforced a narrative of policy convergence that weighs on the dollar. According to FxEmpire, the US currency retreated sharply as traders unwound hawkish bets that had been baked into the short end of the curve. A day earlier, Forex.com noted that markets had priced in a non-trivial chance of a hike, so the hold triggered a relief rally in EUR/USD.

The 2.1% annualised GDP growth, below the consensus 2.4%, added to the dollar’s woes. It wasn’t a collapse, but it reminded markets that the US economy is cooling. With the Bank of Japan also intervening to support the yen, the dollar faced headwinds from multiple angles. FxEmpire reported that the BoJ action applied additional pressure on the US currency, which spilled over into euro strength.

Euro Gains on Hawkish ECB Repricing

Across the Atlantic, the euro found its own footing. Oil’s midweek rebound pushed Brent above $85, nudging the European Central Bank’s own hawkish scenario back into the spotlight. ActionForex flagged that markets lifted the probability of an ECB September hike to roughly 70 percent, a notable repricing from just a few sessions ago. When energy costs rise, the ECB’s inflation headache intensifies, and traders know that Frankfurt remains wary of declaring victory too soon.

FXStreet cited ING’s view that the euro will likely trade a data-driven range into the third quarter, which makes sense given the tug-of-war between sticky services inflation and deteriorating manufacturing surveys. At the same time, Commerzbank pointed out that the split within the Fed, with some members still leaning hawkish, ultimately supports the euro because it caps the dollar’s upside from further rate repricing. If the Fed’s internal debate makes it harder to price in additional tightening, the yield advantage that powered the dollar higher for months erodes.

Technical Crossroads: 100-Day SMA Caps Rally

The push from near 1.1350 midweek brought EUR/USD straight into the 100-day simple moving average, lurking around 1.1500. FXStreet’s technical team noted that the pair weakened toward that level as the moving average again acted as a magnet and a ceiling. Not a breakout, not a rejection. A test.

ActionForex’s mid-day outlook on Thursday offered a more constructive read. The break above 1.1499, a level that had served as resistance after turning from support, argues that the decline from the 1.2081 high may have completed as a three-wave correction at 1.1323. Their bias flipped back to the upside, targeting 1.1621, which coincides with the 38.2 percent Fibonacci retracement of the entire 1.2081 to 1.1323 down leg at 1.1613.

That cluster around 1.1600-1.1620 is the prize. If bulls can engineer a daily close above the 100-day SMA, the correction-was-over thesis gains traction and momentum chasers will likely pile in. Failure to hold above 1.1500, however, keeps the pair rangebound between the moving average and the mid-1.1300 zone where buyers have repeatedly stepped in.

TradeVisor’s AI tracks exactly these inflection points. By monitoring real-time shifts in central bank rate expectations, yield spreads, and momentum signals across multiple timeframes, the platform helps traders gauge when the bias is genuinely tilting rather than just whipsawing. With month-end flows looming and geopolitical headlines simmering, the model’s blend of macro and technical inputs becomes especially relevant.

For now, the board is set. EUR/USD stands at a pivotal juncture where policy narratives, pricing models, and chart levels all agree. The 100-day SMA won’t hold forever, and the next catalyst, whether from US payrolls or a fresh oil spike, will likely decide the pair’s direction for the rest of the quarter.