The EUR/USD pair trades cautiously near 1.0450 on Wednesday as investors await the Federal Reserve’s monetary policy decision later in the day. The Fed is widely expected to keep interest rates unchanged in the range of 4.25%-4.50%. Market participants will closely monitor Fed Chair Jerome Powell’s press conference for clues on the future path of interest rates.
The central bank is concerned about the stalled disinflation trend and the stabilizing labor market. The U.S. Dollar finds support from the Fed’s cautious stance and President Donald Trump’s announcement of tariffs on imports of computer chips, pharmaceuticals, steel, aluminum, and copper. White House Press Secretary Karoline Leavitt indicated that the President is still considering tariffs on Canada, Mexico, and China.
Meanwhile, the Euro faces pressure ahead of the European Central Bank’s policy meeting on Thursday. Traders anticipate a 25 basis point cut in the Deposit Facility rate to 2.75% due to sluggish economic growth in the Eurozone.
eur/usd trades ahead of Fed
Investors will focus on ECB President Christine Lagarde’s press conference for insights on future monetary policy direction. The EUR/USD pair’s upside appears limited amid the prevailing risk-off mood in the market. The pair halted its two-day losing streak and traded around 1.0440 during Asian hours on Wednesday.
In other news, the GBP/USD has erased early gains and turned south toward 1.2400 in European trading. The Bank of Canada is expected to cut rates by 25 basis points, bringing the benchmark rate down to 3.00%. Australia is set to release new inflation data, which could pave the way for a Reserve Bank of Australia rate cut in February.
The gold price struggles to capitalize on the previous day’s gains, oscillating in a narrow trading band amid mixed cues. A positive tone around equity markets acts as a headwind for the safe-haven precious metal.
