The Fed holds off on rate cuts: is EURUSD set to collapse?

The EURUSD pair is falling for the third consecutive trading session, with the price currently at 1.0823. Find out more in our analysis for 21 March 2025.

EURUSD forecast: key trading points

• Easing concerns about an economic downturn put pressure on the EURUSD rate
• The Federal Reserve kept interest rates unchanged and reiterated plans for two more cuts this year
• The EURUSD pair is testing the lower boundary of a Double Top reversal pattern
• EURUSD forecast for 21 March 2025: 1.0680

Fundamental analysis

The EURUSD rate is declining as the Federal Reserve has signalled that it is in no rush to lower interest rates. The US dollar receives additional support from easing concerns about an economic slowdown amid US President Donald Trump’s active trade policy. Furthermore, Federal Reserve Chairman Jerome Powell called the imposed tariffs a temporary measure and emphasised that the regulator does not rush to ease monetary policy further.

On Wednesday, the Fed held rates steady and reiterated its forecast for two quarter-percentage-point cuts this year, which is in line with the median forecast. Traders are seeing signs of a potential EURUSD reversal, according to today’s forecast. The quotes are currently testing a key support level, a breakout below which may push the currency pair lower.

EURUSD technical analysis

The EURUSD rate is testing the lower boundary of the Double Top reversal pattern. The EURUSD forecast for today suggests a continued bearish momentum with the potential for a drop to 1.0680. Technical indicators confirm the likelihood of a further decline, with the price consolidating below the EMA-65 and a bearish divergence formed on the Stochastic Oscillator. A consolidation below the 1.0785 level will confirm the bearish scenario, indicating that the reversal pattern has been formed and the price will start moving towards its target.

Summary

The Federal Reserve's actions and Donald Trump’s trade policy strengthen the US dollar, increasing its potential for further gains. The EURUSD technical analysis indicates that the Double Top pattern has been finally formed, and a breakout below the 1.0785 level will confirm a potential decline to 1.0680.