EUR/USD declines to approximately 1.1775 during the early hours of Wednesday’s Asian session. Federal Reserve policymakers indicated a lack of immediate inclination to alter the current framework of interest rate policy. The European Union has suspended the trade agreement with the United States due to uncertainties surrounding tariffs. The EUR/USD pair experiences a decline to approximately 1.1775 in the early Asian session on Wednesday, influenced by a resurgence in demand for the US Dollar. Market participants are poised for insights into fiscal policies as they anticipate US President Donald Trump’s State of the Union address scheduled for later on Wednesday.
Hawkish comments from Federal Reserve officials lend support to the Greenback, creating a headwind for the major pair. Boston Fed President Susan Collins stated on Tuesday that maintaining the current range for an extended period will be appropriate. Meanwhile, Richmond Fed President Thomas Barkin remarked that monetary policy is “well-positioned” to tackle the risks associated with the economic outlook. The uncertainty surrounding US trade policy persists in the wake of the US Supreme Court’s decision to invalidate President Donald Trump’s “Liberation Day” tariffs.
In a strategic manoeuvre, Trump referenced Section 122 of the Trade Act of 1974 to implement a new 10% global tariff, subsequently indicating a potential increase to 15%. This, in turn, could exert downward pressure on the USD relative to the Euro. The European Parliament has opted to delay a vote on the European Union’s trade agreement with the United States, citing the introduction of new import tariffs as the reason for this postponement.
Christine Lagarde, President of the European Central Bank, stated on Monday that the institution must maintain a “agile” approach to monetary policy, even though it is presently in a strong position. Lagarde reiterated that policymakers will set interest rates “meeting by meeting,” and emphasised that the balance of risks is “broadly balanced.”