The EUR/USD is experiencing a sideways movement on Wednesday as market participants await the Federal Reserve’s monetary policy decision and Chair Jerome Powell’s subsequent press conference. As of the current moment, the pair trade is positioned at 1.1848, reflecting a decline of 0.15%.
The Euro is currently valued at 1.1848 as market participants prepare for the Federal Reserve’s rate decision and the release of updated economic projections at 18:00. US President Trump’s appointee Miran may advocate for a 50 basis point cut, while the hawkish Fed presidents Schmid and Musalem might oppose this move. The ECB’s inflation outlook supports a hold on rates, indicating that a narrowing policy gap with the Fed may bolster the EUR/USD in the future.
>The Euro experiences a decline as the Federal Reserve is anticipated to implement a 25 basis point reduction: At 18:00, the Federal Reserve is anticipated to lower interest rates by a minimum of 25 basis points, following Powell’s recognition of increased downside risks to employment. While it appears that most Fed officials align with the Chair’s perspective, there may be some dissenters. Trump appointee Stephen Miran might advocate for a more substantial cut, whereas hawkish regional Fed presidents Schmid and Musalem could prefer to maintain the current rates. Additionally, the US central bank is anticipated to revise its economic projections, which encompass the Fed “dot plot,” utilized by officials to indicate the trajectory of the fed funds rate moving forward. Subsequently, the attention of traders will pivot to the Powell press conference scheduled for 18:30. The recent inflation data has solidified the European Central Bank’s choice to maintain rates at their current level during the most recent meeting, indicating that the period of easing has concluded. Consequently, additional upside for EUR/USD is anticipated as the interest rate differential between the US and the Eurozone may significantly narrow in the near term.
Latest FX Rate Trends: EUR/USD remains stable despite disappointing US data
- The upcoming Fed Summary of Economic Projections is crucial, as it may influence the trajectory of the fed funds rate for the remainder of the year and into 2026. Currently, market participants have factored in nearly 125 basis points of easing by December 2026, anticipating that rates will conclude within the 3%-3.25% range.
- The US economy exhibited a combination of positive and negative indicators in August. Housing Starts decreased by 8.5% month-over-month, negating July’s 5.2% increase, and dropped to 1.307 million units from 1.428 million — marking the lowest level since May. Building Permits experienced a decline, decreasing by 3.7%.
- In contrast, Retail Sales exceeded projections, rising 0.6% MoM compared to the anticipated 0.2% and surpassing July’s 0.5% growth. The Control Group, integral to GDP calculations, experienced a 0.7% month-over-month increase following a 0.5% rise in the previous month.
- The Eurozone’s report on the Harmonized Index of Consumer Prices for August revealed a year-on-year increase of 2%, falling short of expectations and lower than July’s figure of 2.1%. Core HICP met expectations and remained steady at the prior reading of 2.3%.
- The US Dollar Index, which monitors the dollar’s performance relative to a group of six currencies, has increased by 0.08% to reach 96.73.
- Fitch Ratings anticipates that the Federal Reserve will implement two rate cuts of 25 basis points this year, with one expected in September and another in December, along with three further reductions projected for 2026. The agency does not foresee additional easing measures from the ECB.