EUR/USD, USD/CAD brace for hawkish Fed cut impact

EUR/USD has consolidated near 1.0530, down 0.1% in early trading, as markets prepare for a potentially hawkish Federal Reserve rate cut. Despite expectations of a 25bp reduction, persistent US inflation at 2.7% and robust labor markets suggest the Fed may signal a pause in further easing. USD/CAD has climbed 0.3% to 1.4285, benefiting from dollar strength and softer oil prices, with WTI crude down 1.2% to $69.80. The Dollar Index (DXY) holds firm at 106.50, supported by rising US Treasury yields, with the 10-year reaching 4.42%. Key resistance for EUR/USD sits at 1.0600, while support has formed at 1.0500. USD/CAD faces resistance at 1.4320. Traders should prepare for elevated volatility during the FOMC announcement, particularly if Powell's tone diverges from market expectations of continued dovishness.