• It is expected that the federal reserve will leave the policy rate unchanged to the third in a row.
• Fed Powell chairman will speak about political prospects at a press conference.
• The American dollar may remain resistant to its rivals if the Fed focuses on the perspective of inflation.

The United States Federal Reserve (USA) will announce decisions regarding monetary policy after a meeting of May policy on Wednesday. Market participants generally anticipate that the American Central Bank will leave the settings unchanged to the third in a row, after lowering the interest rate by 25 base points (BPS) to 4.25% -4.5% in December.

The CME Fedwatch tool shows that investors practically see no chance to reduce the rate in May, while the valuation in about 30% of the probability of a reduction by 25 BPS in June. Therefore, market participants will examine changes in the political statement and comments of the Fed Chairman Jerome Powell at a press conference after the meeting to obtain fresh tips on the date of the next rate reduction.

Before the Fed entered the darkening period, several decision -makers expressed concerns about the uncertainty caused by the novel US trade system on the labor market.

Neel Kashkari, president of Minneapolis Fed, said that some companies indicate that they are preparing for possible restrictions on jobs if uncertainty continues. Similarly, the Fed governor Christopher Waller told Bloomberg that he would not be surprised by seeing more release and higher unemployment, adding that growing unemployment could pave the path of rate reductions. According to Bureau of Labor Statistics, non -farmed wages increased by 177,000 in April, exceeding market expectations of 130,000, and the unemployment rate remained unchanged at 4.2%, investors were reluctant to value the price of the rate reduction in June.

Looking through the Fed’s May meeting, Analysts from Danske Bank said: “We expect the FED to keep its monetary policy unchanged at the May meeting, in accordance with consensus and market prices.”

“Although we expect the Fed to resume cutting indicators in June, we doubt that Powell decides on clear guidelines for the uncertainty of the tariff. The risk of growth remains tilted to the minus, but the growing inflation expectations still constitute a problem,” added analysts.

When the Fed announces the decision on the interest rate and how can it affect EUR/USD?

The US Federal Reserve is to announce its interest rate decision and publish a monetary policy statement on Wednesday at 18:00 GMT. Then the Fed Fed Jerome Powell press conference begins at 18:30 GMT.

Investors will pay special attention to how Fed and President Powell assess the latest economic development. Although the report on the April employment showed that the terms in the labor market remain relatively robust, the Economic Analysis Office announced in its Flash that the gross domestic product (GDP) in the US contained 0.3%in the first quarter.

In the event that the FED recognizes the increased risk of recession and its potential negative impact on employment, investors could see it as a dove language. In this scenario, the American dollar (USD) could be renovated sales pressure. On the other hand, investors could refrain from valuing in a reduction in the rate in June and support compared to rivals if the Fed leaves the concerns about growth and suggests that he will remain patient with policy corrections while waiting for how tariffs affect inflation.

Eren Sengezer, the main analyst of the European session in FXStreet, provides brief -term technical perspectives for EUR/USD:

“A close term technical perspective indicates the loss of a stubborn momentum, with a relative force indicator (RSI) on the daily chart retreating in the direction of 50. In addition, EUR/USD trades near a 20-day straight movable average (SMA) after maintaining a convenient above this level throughout the whole.”

“On the other hand, fibonacci 23.6% of the leveling levels that began in January, creates key support at 1.1200. In the event that EUR/USD is approaching this level and begins to apply IT as resistance, technical sellers may remain interested, opening the door for the extended slide in the direction of 11015-1.1000 (fibonacci 38.2% level, Round, 50-year-old) and 1.0860 (fibonacci 50% regrowth).

(This story was improved on May 7 at 11:13 GMT to say that in the first missile and the first paragraph Fed should keep interest rates on the third in a row, not the fourth).