The US Dollar Index holds near 98.50 ahead of the Fed’s rate decision, while EUR/USD is set to take direction following the announcement.

Dollar Index

The US Dollar Index hovered around 98.65 in early Wednesday Asian trading, showing little change. The Fed is broadly expected to keep rates unchanged at 3.50%–3.75% at its April meeting. Market focus will then turn to Thursday’s US Q1 GDP and PCE inflation data.

The US Dollar Index (DXY), which tracks the value of the US Dollar (USD) against a basket of six major currencies, is trading around 98.65 during Wednesday’s Asian session. The index remains stable as investors await the Federal Reserve’s interest rate decision later in the day.

The Fed is widely anticipated to keep the federal funds rate unchanged at 3.50%–3.75%, a level maintained since January. This meeting may also be Chair Jerome Powell’s last before a potential transition to nominee Kevin Warsh.

Market participants will pay close attention to Powell’s post-meeting press conference for guidance on the Fed’s outlook amid ongoing economic risks. A more hawkish stance on persistent inflation could provide short-term support for the US Dollar against other major currencies.

According to Carol Kong, currency strategist at Commonwealth Bank of Australia, uncertainty remains over Powell’s future role, including whether he will step down as Chair or continue serving as a governor beyond his term.

Looking ahead to Thursday, investors will focus on the preliminary US Q1 GDP data and the Personal Consumption Expenditures (PCE) Price Index. Weaker-than-expected results from these reports could put downward pressure on the DXY.

EUR/USD Price Forecast

EUR/USD remains steady around 1.1700 ahead of upcoming Fed and ECB policy decisions, with both central banks expected to keep rates unchanged. Meanwhile, German HICP is projected to rise at a faster annual rate of 3% in April.

EUR/USD trades sideways around 1.1700 in Wednesday’s Asian session, as markets await key Fed and ECB policy decisions. Both central banks are expected to keep rates unchanged while flagging inflation risks linked to higher energy prices amid ongoing Strait of Hormuz disruptions. Investors will closely watch commentary from Jerome Powell and Christine Lagarde for signals on future policy direction. Ahead of the meetings, attention also turns to German April HICP data, expected to show inflation rising to 3% YoY from 2.7%.

EUR/USD technical outlook

EUR/USD is trading flat around 1.1700, showing a sideways bias as it continues to hover near the 20-day EMA at 1.1698, while still holding above the 38.2% Fibonacci retracement level at 1.1666.

The RSI has moved back into the 40–60 neutral zone after failing to sustain levels above 60, signaling fading upside momentum, although the broader bullish bias is still in place.

On the upside, immediate resistance is seen at the 50% Fibonacci level near 1.1745, followed by 1.1825 (61.8% retracement), then 1.1938 and the recent cycle high around 1.2082. On the downside, initial support lies at 1.1666; a break below this level could open the way toward 1.1567 (23.6% retracement) and further down to the key structural support near 1.1408.