EUR/USD awaits FOMC decision with focus on July rate cut prospects

EUR/USD consolidated near 1.0735 ahead of the crucial FOMC meeting, with markets closely watching for signals about a potential July interest rate cut from the Federal Reserve. The pair has traded in a tight 30-pip range as traders await clarity on the Fed's monetary policy trajectory amid mixed economic signals and persistent inflation concerns. Market pricing currently shows a 65% probability of a 25-basis-point cut in July, though Fed communication could significantly shift these expectations. European Central Bank officials have maintained their gradual easing stance, creating a potential policy divergence that could impact the exchange rate. Technical levels show EUR/USD trapped between resistance at 1.0760 and support at 1.0710, with a breakout likely following the Fed announcement. Volatility measures indicate markets are positioned for a significant move, with options pricing suggesting a potential 80-pip range post-FOMC.