EUR tests support: Fed decision next

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The EUR/USD is trading near a fresh monthly low around 1.0480. The European Central Bank delivered a widely expected 25-basis-point rate cut earlier in the day and downgraded its growth outlook, signaling weaker-than-anticipated economic performance.

Policymakers hinted at additional easing, with a 25-basis-point cut projected for each of the next two meetings. Markets are now pricing in another 25-bps reduction in January, though expectations for a more aggressive 50 bps cut in March or earlier are being pared back.

The pair briefly touched a low of 1.0463, and technical indicators suggest further downside risks. Short-term momentum might point to more downside, with traders eyeing the 1.0450 support level and potentially testing the two-year low of 1.0330.

Attention now turns to the Federal Reserve’s decision this coming Wednesday.

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