EUR/USD defends 1.1550-40 support as USD consolidates post-FOMC gains, lacks follow-through

• EUR/USD edges higher on Friday as the USD consolidates the post-FOMC gains.

• The Fed’s hawkish tilt could underpin the USD bulls and cap gains for the major.

• ECB’s on-hold decision and uncertain outlook warrant caution for the EUR bulls.

The EUR/USD pair attracts some dip-buyers during the Asian session on Friday and, for now, seems to have snapped a two-day losing streak back closer to the monthly low, around the 1.1550-1.1540 horizontal support. Spot prices, however, lack bullish conviction and currently trade around the 1.1575 region, up less than 0.10% for the day.

The US Dollar (USD) consolidates its strong gains registered over the past two days, to highest level since early August set on Thursday, and turns out to be a key factor acting as a tailwind for the EUR/USD pair. Any meaningful USD depreciation now seems elusive in the wake of the US Federal Reserve's (Fed) hawkish tilt. In fact, Fed Chair Jerome Powell pushed back against market expectations for another interest rate cut in December, which, along with reviving safe-haven demand, should help limit deeper USD losses.

The European Central Bank (ECB), on the other hand, held its key deposit facility rate steady at 2% for the third consecutive time on Thursday and said that inflation remains close to the 2% medium-term target. The ECB, however, warned that the Eurozone's economic outlook remains uncertain amid global trade disputes and geopolitical tensions. Moreover, policymakers are divided on future rate cuts, which, in turn, might hold back traders from placing aggressive bullish bets around the Euro (EUR) and cap the EUR/USD pair.

Hence, it will be prudent to wait for some follow-through buying before positioning for a further intraday move higher. On the other hand, a sustained break below the 1.1550-1.1540 strong horizontal support will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Nevertheless, the EUR/USD pair seems poised to register losses for the second consecutive week and remains at the mercy of the USD price dynamics. Hence, speeches from influential FOMC members should provide a fresh impetus later this Friday.