Two-phase FOMC reaction on EURUSD explained: Where next?EURUSD experienced a classic "dovish-then-hawkish" whipsaw following the Fed's 25bp cut. The Initial dovish reaction saw the fibre surge above 1.19 to multi-year highs as the dot plot showed 50bp additional cuts vs expected 25bp in 2025. However, Powell's hawkish presser reversed gains within the hour, describing the cut as "risk management" rather than an aggressive easing cycle start.
EURSD is finding support at 1.1778 (previous high), with the price having taken out the 100% Fibonacci extension from August lows. Critical support sits at 1.1740, with a break below invalidating the bullish bias.
Bullish Scenario
Targets : 1.1830, 1.1866 (critical level), then 1.2000-1.2032
Triggers : Hold above 1.1778, break above 1.1866
Rationale : ECB-Fed divergence theme intact with ECB holding, while Fed cuts
Bearish Scenario (Potential Dead Cat Bounce)
Targets : 1.1750, 1.1730
Entry : Short at 61.8% Fibonacci retracement (~1.1832)
Stop : Above 1.1878
R:R Ratio : 3.38
Where next?
ECB pause vs Fed easing supports underlying bullish EUR/USD theme despite near-term volatility. But the next FOMC meetings are more critical as Powell emphasised a "meeting-by-meeting" approach. Current pullback is likely a retracement before a potential continuation higher, but watch for rejection at the weekly trendline resistance shy of 1.20.
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