The EUR/USD pair remained anchored around the 1.1300 level on Wednesday, with price action largely rangebound following a broadly expected interest rate decision from the US Federal Reserve. Traders digested another round of cautious commentary from Fed Chair Jerome Powell, while a quiet European economic calendar left the euro with little directional impetus.
At its latest policy meeting, the Fed acknowledged that while employment and overall economic activity in the US remain robust, growing risks tied to trade tensions and tariff uncertainty are clouding the outlook. The central bank refrained from altering rates but signaled a clear preference for patience, reinforcing a data-dependent stance.
Chair Powell, in his post-meeting press conference, stressed the need for further clarity before the Fed considers any policy shift. He warned that persistent US tariffs could derail the Fed’s goals on inflation and employment, citing policy uncertainty as a key reason for the central bank’s reluctance to act hastily.
Although Powell acknowledged that trade tensions under the previous administration had negatively affected business and consumer confidence, he noted that hard economic data have yet to show significant deterioration. This mixed backdrop has complicated the Fed’s policy calculus.
Market participants are still pricing in a potential 25-basis-point rate cut in July, according to CME’s FedWatch Tool. However, the probability of the Fed keeping rates on hold has climbed to 30%, reflecting growing doubts about the timeline for the next policy move.
EUR/USD Outlook:
Technically, the euro has managed to establish a short-term floor above 1.1200, helping lift the pair back toward the 1.1300 region. Despite easing from multi-month highs north of 1.1500, downside momentum remains constrained. Traders are likely to stay on the sidelines until fresh macro catalysts emerge, with near-term volatility expected to remain subdued absent a major shift in US or eurozone fundamentals.
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