Euro Steadies Ahead of Federal Reserve Decision Amid Inflation Warnings

The euro has stabilized around $1.1535 against the US dollar in the European session on Wednesday, ahead of the highly anticipated Federal Reserve decision scheduled for 18:00 GMT.

Market analysts are closely watching the CME FedWatch tool, which indicates a 92.5% probability of a 25 basis point rate hike and an almost 79% chance of at least two hikes by year-end.

The European Central Bank has also flagged elevated inflationary pressures in the euro area, potentially implying further tightening, after lifting policy rates by 25 bps last week.

For traders considering bearish EUR/USD positioning, a strategy involving short-term put options is suggested, with a strike price of $1.1450 offering an attractive risk-reward ratio.