EUR/USD Weakens Ahead of the Fed and ECB Decisions
EUR/USD moved lower in Asian session trading after failing to maintain its strengthening on the previous day. The euro exchange rate against the US dollar fell below the psychological level of 1.1500, after previously recovering from the 1.1415 area, which was one of the lowest levels since mid-2025.
Current market movements tend to be limited as investors await policy decisions from the world's two main central banks. The Federal Reserve is scheduled to announce its interest rate decision on Wednesday, followed by a decision from the European Central Bank on Thursday.
Policymakers are facing a new challenge in the form of a potential increase in inflation after oil prices soared since the conflict in Iran. These conditions make the market think that the central bank may be more careful in reducing interest rates.
On the other hand, expectations that the Fed will delay cutting interest rates also support the strengthening of the US dollar. Meanwhile, the euro is facing pressure due to concerns that high energy prices could slow economic growth in the euro area which relies heavily on energy imports.
Market sentiment also improved slightly after US President Donald Trump again called for the reopening of energy shipping lanes in the Strait of Hormuz. This helped ease some market tensions and improved global risk sentiment.
However, market players are still careful to wait for central bank policy signals before determining the next direction of movement for the EUR/USD pair.
Impacts to Be Aware of
1. Forex Market Volatility
Interest rate decisions from the Fed and ECB can trigger sharp movements in the EUR/USD pair.
2. Eurozone Economic Pressure
High energy prices could suppress economic growth in the euro area.
3. US Dollar Strength
If the Fed delays cutting interest rates, the US dollar has the potential to remain strong.
4. Global Risk Sentiment
The development of the Middle East conflict and the stability of energy pathways may influence global financial markets.
Things Investors Need to Pay Attention to
• The Fed's interest rate decisions and the direction of its monetary policy.
• ECB meeting and euro area economic projections.
• Movements in global oil prices that influence inflation.
• Geopolitical developments in the Middle East, especially regarding energy routes.
• EUR/USD technical level movement, especially around the 1.1400–1.1500 area.(CP)
Source: Newsmaker.id
