Euro Struggles as Dollar Regains Strength Ahead of Crucial Fed Decision

The euro came under renewed pressure at the start of the week, slipping toward a one-week low as the US dollar regained momentum ahead of a highly anticipated interest-rate decision from the Federal Reserve. After briefly touching an intraday high during the European session, the pair retreated toward the 1.1620 range, reflecting growing caution in global markets.

The dollar’s rebound comes as traders adjust their expectations for Wednesday’s policy announcement, where the Fed is widely expected to deliver another rate cut. Meanwhile, the European Central Bank is seen keeping rates unchanged later this month. This divergence in policy direction has prevented the euro from falling sharply, but it has also limited its ability to extend recent gains.

Despite the latest pullback, the broader market environment still offers some support for the euro. Recent sessions had shown steady upward movement, thanks to improving sentiment and a recovery from late-November lows near the 1.1500 zone. However, the pair continues to struggle around the key 1.1650 resistance area — a level that traders see as a major barrier to any sustained breakout.

A convincing close above this threshold could reinforce bullish momentum and pave the way toward the next potential upside targets near 1.1700 and 1.1750. On the downside, the euro remains cushioned by shorter-term support levels that have held firm in recent days. A drop below these layers of support, however, could revive bearish pressure and drag the currency pair back toward its previous lows.

Market signals suggest a cautious but mildly constructive outlook. Momentum indicators point to a still-positive, though moderating, bias. Buying interest remains steady yet lacks the aggressive conviction needed to push the pair decisively higher. Traders are now largely waiting for the Fed’s decision — a catalyst that could inject fresh volatility into major currency markets.

In broader currency performance today, the euro showed mixed dynamics against major counterparts, posting its strongest relative showing against the Swiss franc while slipping modestly against the US dollar. This uneven performance underscores the current environment of shifting sentiment and event-driven moves.

With central-bank decisions looming and sentiment fluctuating across global markets, EUR/USD appears set for a potentially pivotal week — one that could determine whether the recent recovery continues or fades under renewed dollar strength.