Dollar Holds as Fed Keeps Rate Path Uncertain; EUR, GBP Await Data

The Federal Reserve left its benchmark rate at 3.50% to 3.75% and gave no forward guidance. Chair Kevin Warsh, described by the committee as a data-dependent policymaker, said only that the Fed remains focused on returning inflation to the 2% target. With the September meeting still months away, traders are turning to the Personal Consumption Expenditures report and the monthly labor data for the next signal on the rate path.

The dollar index has recovered from a low of 100.76, climbing above the 23.6% Fibonacci retracement at 100.94 to trade at the 38.2% level of 101.04. It remains below the 50-period exponential moving average at 101.20 and the 100-period EMA at 101.10. The relative strength index has risen to 43, indicating that bearish momentum is softening without a confirmed bullish shift. Resistance sits at 101.13, then 101.22 and 101.34. Support is at 101.04 initially, with stronger floors at 100.94 and 100.76. The near-term bias is cautiously bullish as long as the index holds above 101.04.

The euro has crept higher, supported by expectations that the European Central Bank will hold its deposit rate at 2.25% for a prolonged stretch. ECB officials have stressed a meeting-by-meeting approach. Investors are waiting for second-quarter Eurozone GDP and July inflation prints to gauge whether the region's economic momentum justifies a steady policy stance. Any sign of sustained growth would reinforce the case for the ECB to keep rates unchanged through the third quarter.

EUR/USD has rallied after finding strong support at 1.1367, gains capped by long-term resistance near 1.1474 and a descending trendline. The pair is above both the 50-EMA at 1.1406 and the 100-EMA at 1.1415, a short-term bullish signal. The RSI has risen to 59, pointing to strengthening bullish momentum. Resistance is at 1.1474, then 1.1527 and 1.1577. Support is at 1.1418, then 1.1367 and 1.1324. The short-term bias is bullish above 1.1418. A sustained move above 1.1474 would invalidate the descending trendline and open the path toward 1.1527. A failure to hold 1.1418 would likely trigger a correction back to 1.1367.

Sterling is bracing for the Bank of England decision next week. Most analysts expect no change in the current rate. The outlook is clouded by conflicting signals: inflation is easing, wage growth remains strong, and energy costs are rising as the Middle East conflict escalates. UK credit, housing, and business activity data due before the meeting will help clarify domestic demand strength and inform how long the BoE can stay on hold.

GBP/USD is hovering near its main Fibonacci support at 1.3300, awaiting the BoE decision. The pair trades below the 50-EMA at 1.3344 and the 100-EMA at 1.3357 above the July rising trendline. The RSI is near 54, reflecting improving momentum without a confirmed breakout. Immediate resistance is at 1.3400, followed by 1.3460 and 1.3559. Support is at 1.3300, then 1.3229 and 1.3140. The outlook is neutral ahead of the BoE. A hold above 1.3300 keeps the bullish recovery scenario intact. A break below that level would open the door to 1.3229 or lower.

The next concrete catalysts are Thursday's US PCE data, Friday's labor report, and the Bank of England decision on Aug. 8.

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