Euro risks falling further after Fed meeting
In the FOREX currency market, the euro remains under pressure from the U.S. dollar. On Wednesday morning, October 28, 2026, the EUR/USD pair is trading near $1.1121 per euro. Investors prefer not to open large positions ahead of today's meeting of the Federal Open Market Committee (FOMC) of the U.S. Federal Reserve, at the conclusion of which an interest rate decision will be announced. An additional factor of uncertainty will be the European Central Bank meeting scheduled for Thursday, October 29.
U.S. Fed: will the regulator keep the rate?
The main event of the day is the U.S. Federal Reserve's monetary policy decision. The FOMC meeting is taking place on October 27–28, and the announcement of the decision is scheduled for October 28 at 14:00 New York time (20:00 Kyiv time). Federal Reserve Chair Kevin Warsh's press conference is due to begin at 14:30 New York time (20:30 Kyiv time).
The market largely expects the U.S. central bank to keep the rate in the range of 3.75–4.00% per annum. According to market estimates, the probability of such a decision exceeds 90%. Therefore, for the currency market, not so much the decision itself but the comments of the Fed leadership regarding the further rate trajectory will be important.
Investors will closely monitor the assessment of inflation risks. The rise in energy prices reinforces concerns that inflation in the U.S. will remain high, meaning the Fed will have to maintain a tight monetary policy for longer. Against this backdrop, market participants maintain the likelihood of another rate hike in December.
How will this affect the euro? If Kevin Warsh signals that the decline in inflation is not fast enough and a rate hike in December remains a real scenario, the dollar may strengthen. In that case, the EUR/USD pair risks falling below current levels.
If, on the other hand, the Fed chair takes a more dovish stance and gives the market reason to expect a prolonged pause in rate hikes, the dollar may weaken, and the euro will have a chance to recover.
Why the euro remains under pressure
U.S. monetary policy is not the only factor affecting the European currency. In October, the euro lost about 1.7% against the dollar and was among the weakest currencies of developed countries. Additional pressure comes from high energy prices, concerns about the budget situation in France, and instability in the European government bond market.
Market participants are already shifting attention to the next important event – the European Central Bank meeting on October 29. The regulator is expected to keep interest rates unchanged after the increase in September. Therefore, the ECB's comments on inflation, economic growth, and possible further changes to monetary policy will be of key importance for the euro.
EUR/USD exchange rate forecast
In the short term, the euro's dynamics will depend primarily on the outcome of the Fed meeting and Kevin Warsh's speech.
If the U.S. central bank confirms its readiness to continue fighting inflation and does not rule out a rate hike in December, the dollar may receive additional support. In this case, the EUR/USD pair risks falling below $1.11, and the next target for sellers could be the $1.1075 area.
On the contrary, more dovish statements from the Fed could provoke a weakening of the dollar and a recovery of the euro. However, for the European currency to sustain growth, an improvement in the overall market environment and a reduction in concerns about the Eurozone's economic and budget problems will be required.
Main takeaway: on Wednesday, October 28, the currency market will be waiting for signals from the U.S. Fed on interest rate prospects. Keeping the rate unchanged is already largely priced in. Therefore, the decisive factor for the euro will be the rhetoric of the U.S. regulator: hawkish signals may strengthen the dollar, while a more dovish Fed stance will give EUR/USD a chance to recover. On Thursday, investors' attention will shift to the ECB decision.
