EUR/USD dipped below the psychological resistance of 1.0500 on Tuesday.

The major currency pair remained fragile as the US Dollar (USD) strengthened on expectations that the Federal Reserve (Fed) will take a slightly hawkish stance after cutting its key lending rate by 25 basis points (bps) to 4.25%-4.50% on Wednesday.

According to the CME FedWatch tool, traders have priced in a 25 bps rate cut for Wednesday's policy meeting. The data also showed that the Fed is expected to leave rates unchanged at its January meeting.

Analysts at Macquarie said that the Fed's stance could shift "slightly hawkish" from "dovish" on the assumption that "the recent slowdown in the pace of US disinflation, a lower-than-expected Unemployment Rate in September, and excitement in US financial markets contribute to this more hawkish stance."

Source: FXStreet