EURUSD is under pressure: Federal Reserve rate expectations are changing

The EURUSD rate is undergoing a minor correction and remains within the downtrend. Find out more in our analysis for 14 January 2025.

EURUSD forecast: key trading points

• The US economy shows stability, prompting traders to revise expectations for Federal Reserve rate cuts
• Investors will focus on key inflation data this week
• EURUSD forecast for 14 January 2025: 1.0220 and 1.0125

Fundamental analysis

The EURUSD rate is rising slightly, with buyers maintaining support at the 1.0220 support level. Signs of stability in the US economy are leading traders to reconsider expectations for Fed interest rate cuts in 2025. Investors eagerly await the release of key inflation data this week, which could significantly influence monetary policy forecasts.

According to Friday’s statistics, the US economy added 256 thousand jobs in December, well above analysts’ average expectations. The unemployment rate declined to 4.1% from 4.2% in November. Analysts had projected jobs to increase by 165 thousand, with most expecting unemployment to remain unchanged.

Amid this data, market participants have begun to adjust their forecasts for future Federal Reserve policy. Experts now believe the regulator will unlikely cut the key rate in 2025. Traders consider that the Fed currently lacks a basis eve even for discussing a potential rate cut in the near term.

EURUSD technical analysis

The EURUSD quotes have stabilised above the EMA-65 line but remain below the EMA-285, indicating continued bearish pressure. According to today’s EURUSD forecast, the price is expected to rise to 1.0280 before retracing to 1.0125. The crossing of signal lines on the Stochastic Oscillator provides an additional signal supporting a decline.

If the price firmly establishes itself below the 1.0220 support level, this will pave the way for a further decline to the next target of 1.0125. Conversely, price consolidation above the 1.0280 level will invalidate the bearish scenario, enabling a deeper correction towards 1.0370.

Summary

The stability of the US economy reduces the likelihood of a Federal Reserve interest rate cut in 2025, supporting the US dollar. EURUSD technical analysis shows that the pair remains under bearish pressure and could plunge to 1.0125 if it consolidates below the 1.0220 level. However, a breakout above the 1.0280 resistance level could enable the price to resume growth towards 1.0370.