EURUSD ahead of the Fed decision: will higher rates support the dollar, or will the euro stage a comeback?

The euro continues to strengthen against the USD ahead of the Federal Reserve’s rate decision. The EURUSD pair is testing the 1.1545 area. Find out more in our analysis for 18 March 2026.

EURUSD forecast: key takeaways

• Eurozone Consumer Price Index (CPI) for February: previously at 1.7%, projected at 1.9%
• US Federal Reserve interest rate decision: previously at 3.75%, projected at 3.75%
• EURUSD forecast for 18 March 2026: 1.1635

Fundamental analysis

The EURUSD forecast takes into account that the price continues its downward movement today, trading around 1.1570.

The Consumer Price Index measures price movements for goods and services from the consumer’s perspective. It is a key tool for assessing changes in consumer preferences and inflation. The CPI is calculated excluding energy and food due to seasonal volatility in these categories.

The impact of the CPI on exchange rates can be mixed: an increase in the index may contribute to higher interest rates and a stronger national currency. However, in an economic crisis, a rising CPI can worsen conditions, potentially leading to a weaker currency. The analysis for 18 March 2026 shows that the previous eurozone CPI was 1.7%, while the forecast is 1.9%. If the actual figure comes in at or above the forecast, it would provide additional support for the euro.

Today, the Federal Reserve will hold a meeting and announce its interest rate decision. The EURUSD forecast for today considers several possible outcomes:

• The Fed keeps the rate unchanged at 3.75%, which would likely not trigger major market turbulence, and the EURUSD rate would continue to move in its current direction
• The Fed raises the rate to support the USD, which would push the EURUSD pair lower
• The Fed lowers the rate given economic realities, which could shock investors and trigger a sharp weakening of the USD

Amid the ongoing military conflict between the US and Iran that began only three weeks ago, the Federal Reserve is expected to decide on Wednesday to hold interest rates steady. However, the key focus will be the updated projections and the monetary policy statement, which should explain how, in the Fed’s view, President Donald Trump’s decision to initiate a prolonged conflict with Iran has affected the US economic outlook, inflation, and the direction of monetary policy.

Technical outlook

On the H4 chart, the EURUSD pair has formed a Hammer reversal pattern near the lower Bollinger Band and continues a corrective move as the pattern signal plays out, with a potential pullback target at 1.1635.

At the same time, today’s EURUSD forecast also considers an alternative scenario. Since the price remains within a descending channel, after the correction ends, the pair may move towards 1.1450. A breakout below this level would open the door for a continuation of the broader downtrend.

EURUSD overview

• Asset: EURUSD
• Timeframe: H4 (Intraday)
• Trend: bearish
• Key resistance levels: 1.1635 and 1.1750
• Key support levels: 1.1450 and 1.1320

EURUSD trading scenarios for today

Main scenario (Sell Stop)

A breakout and consolidation below 1.1450 would confirm continued downward movement after the pullback. Sellers remain in control amid a resilient dollar and Fed-related expectations.

• Take Profit: 1.1320
• Stop Loss: 1.1480

Alternative scenario (Buy Stop)

A consolidation above 1.1585 may signal an upward wave with the potential to test the 1.1635–1.1750 area.

• Take Profit: 1.1750
• Stop Loss: 1.1550

Risk factors

Risks to the bearish scenario are linked to the Federal Reserve’s rate decision, with a rate cut likely to weaken the US dollar and trigger a surge in EURUSD.

Summary

The EURUSD pair continues a corrective rebound ahead of the Federal Reserve’s interest rate decision. Technical analysis suggests a rise towards 1.1635 before a decline.

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