EUR/USD Near 1.16: Fading Rallies and FOMC Uncertainty Point to Mild Bearish Bias

EUR/USD stalls near 1.16 as fading rallies, technical resistance and divergent fundamentals ahead of the FOMC point to a mildly bearish outlook for the euro.

EUR/USD continues to struggle around the 1.16 area as fading rallies meet persistent technical resistance and growing uncertainty ahead of the Federal Open Market Committee (FOMC) meeting. Traders eye the euro-dollar closely, weighing short-term momentum against conflicting economic signals. With price action failing to sustain advances, the balance looks tilted toward a mildly bearish outlook until clearer guidance emerges from policymakers.

From a technical perspective, the 1.16 region has acted as a firm ceiling for recent attempts to lift EUR/USD. Moving averages converge near this level, and momentum indicators have softened after each rally attempt, suggesting limited upside conviction. Chart watchers note that each rejection from resistance has been followed by lower intraday highs, a classic sign that buyers are losing control. Unless the pair breaks decisively above 1.16 with volume, technical trends favor renewed downside pressure.

Fundamentals add another layer of divergence. The euro faces headwinds from uneven growth data in the eurozone and persistent inflation dynamics that keep investors cautious. Meanwhile, the U.S. dollar is supported by expectations around Fed policy and a historically resilient U.S. economy. With the FOMC meeting looming, markets are pricing in a wide range of outcomes — and that uncertainty tends to benefit the dollar as a safe-haven and policy-sensitive currency.

The combination of technical resistance and fundamental divergence does not point to an aggressive sell-off, but it does suggest a higher probability of sideways-to-lower moves for the euro-dollar in the near term. Traders looking to position around the FOMC should consider the risk of volatility spikes and potential whipsaws. A conservative approach is to wait for a confirmed break above 1.16 to validate bullish scenarios, or a drop below recent intraday support to signal a clearer bearish trend.

In summary, EUR/USD at 1.16 faces a delicate mix of fading rallies and FOMC-driven uncertainty. Technical resistance and differing economic fundamentals favor a mildly bearish outlook, but clear direction will likely depend on upcoming policy signals and market reaction to the Fed's messaging. Manage risk carefully and monitor both price structure and economic releases for confirmation.

Back