EUR/USD holds steady at $1.09 as markets await Fed decision
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The EUR/USD pair remains stable near $1.09, consolidating its recent 5% rally since March 3, as traders prepare for key macroeconomic events this week. Despite volatility from Trump’s aggressive trade policies, the euro continues to trade above its 50-day, 100-day, and 200-day moving averages, signaling a strong bullish trend from a technical perspective.
Markets are now focused on Wednesday’s Federal Reserve meeting, where interest rates are expected to remain unchanged at 4.25%-4.50%. However, with the decision already priced in, attention will shift to Fed Chair Jerome Powell’s guidance on future policy moves. Trump’s tariff hikes pose fresh inflation risks, potentially disrupting the Fed’s easing path and weighing on consumer and business sentiment.
Interestingly, Trump’s policies have also put pressure on the U.S. dollar, challenging its global dominance. Investors have reduced their exposure to the greenback, seeking alternatives with stronger economic outlooks. The risk of trade isolationism could accelerate dollar weakness, which, while supporting U.S. exports, may fuel inflationary pressures. If inflation concerns resurface, the Fed could be forced to tighten monetary policy further, increasing market uncertainty.
For now, EUR/USD remains in an upward trajectory, but the Fed’s tone on inflation and liquidity management will dictate the next move. A hawkish Powell could cap euro gains, while a dovish stance may push the pair toward the 1.10 level.
Markets are now focused on Wednesday’s Federal Reserve meeting, where interest rates are expected to remain unchanged at 4.25%-4.50%. However, with the decision already priced in, attention will shift to Fed Chair Jerome Powell’s guidance on future policy moves. Trump’s tariff hikes pose fresh inflation risks, potentially disrupting the Fed’s easing path and weighing on consumer and business sentiment.
Interestingly, Trump’s policies have also put pressure on the U.S. dollar, challenging its global dominance. Investors have reduced their exposure to the greenback, seeking alternatives with stronger economic outlooks. The risk of trade isolationism could accelerate dollar weakness, which, while supporting U.S. exports, may fuel inflationary pressures. If inflation concerns resurface, the Fed could be forced to tighten monetary policy further, increasing market uncertainty.
For now, EUR/USD remains in an upward trajectory, but the Fed’s tone on inflation and liquidity management will dictate the next move. A hawkish Powell could cap euro gains, while a dovish stance may push the pair toward the 1.10 level.