EUR/USD Price Forecast: 1.1500 to remain key support level for Fed’s Day

EUR/USD is trading cautiously at approximately 1.1545 against the US Dollar during Wednesday's early European trading session. The pair is anticipated to face pressure as the Federal Reserve (Fed) is set to release its monetary policy decision at 18:00 GMT. Experts believe the Fed may increase interest rates by 25 basis points to the 3.75%-4.00% range, despite inflationary pressures remaining above the central bank's 2% target, as indicated by the latest Consumer Price Index (CPI) report.

Investors will closely monitor the Fed's statement and Chairman Kevin Warsh's press conference for insights into the US interest rate outlook. Analysts at ABN Amro suggest that the rationale for another rate hike is precautionary, aiming to prevent inflation from becoming more persistent rather than directly reducing inflation. EUR/USD is currently at 1.1548, showing a mildly bearish tone as it remains below the 20-day exponential moving average (EMA) at 1.1590.

The failure to surpass this dynamic barrier indicates that recent recoveries are being sold into, while the Relative Strength Index (RSI) hovers around 43, signaling downside pressure. Strategists at Scotiabank view the current market conditions as "neutral/bearish," with the RSI having recently fallen into bearish territory after briefly exceeding the overbought threshold at 70 in late August.

To potentially shift the market sentiment, a daily close above the 20-day EMA would be necessary, providing support at the 1.1590 level. Below this level, the psychologically significant 1.1500 mark serves as the key support zone.