EUR/USD experiences a decline, settling at approximately 1.1745 during the early Asian session on Wednesday. According to the Fed Minutes, a majority of officials anticipate further reductions in interest rates. The ECB maintained interest rates at their current level earlier this month and suggested that they are expected to stay stable for the foreseeable future. The EUR/USD pair encounters selling pressure around 1.1745 in the early Asian session on Wednesday. The US Dollar shows a slight increase against the Euro following the publication of the minutes from the Federal Reserve’s December meeting. The upcoming release of the US Initial Jobless Claims report is anticipated later today. Anticipation surrounds trading volumes, which are projected to stay subdued as the New Year holidays approach.
Minutes from the Fed’s December 9-10 meeting reveal that the US central bank opted to reduce the interest rate by 25 basis points, adjusting the federal funds rate to a target range of 3.50%–3.75%. Proponents highlighted the growing downside risks to employment alongside the alleviation of inflationary pressures. Governor Stephen Miran opposed the decision to implement a significant rate reduction, whereas Chicago Fed President Austan Goolsbee and Kansas City’s Jeff Schmid expressed dissent in support of maintaining current rates.
Most Fed officials viewed additional interest-rate cuts as suitable, provided inflation decreases over time; however, they continued to have differing opinions on the timing and extent of the reductions. After the release of the FOMC minutes, the likelihood of a rate cut in January, as indicated by federal funds futures contracts, has decreased marginally to approximately 15%, as per reports.”We lack clarity in Fed policy, which is evident in the dollar and currency rates, as well as in the interest rates and Treasury rates. Consequently, the market is somewhat directionless at this moment,” stated Joseph Trevisani.
Conversely, indications that the European Central Bank is concluding its rate cut cycle could potentially mitigate the declines of the shared currency. The ECB maintained interest rates at their current level earlier this month and indicated that they are expected to stay that way for the foreseeable future. ECB President Christine Lagarde indicated that the central bank is unable to offer forward guidance on upcoming rate adjustments because of significant uncertainty, highlighting a data-driven, meeting-by-meeting strategy. The money market has factored in a 25 bps interest rate cut by the ECB in February 2026, which currently remains below 10%.