Euro steadies near 2021 highs as Fed decision looms

The euro stabilized just above $1.18, holding close to its strongest level since September 2021, as investors awaited the US Federal Reserve’s policy announcement and updated economic projections due later today.

Markets broadly expect the Fed to cut rates by at least 25 basis points and signal further easing, as policymakers weigh a cooling labor market against lingering tariff-driven inflationary pressures. European officials, by contrast, continue to stress caution.

ECB executive board member Isabel Schnabel urged policymakers to “keep a steady hand,” citing risks from tariffs, services inflation, food prices, and fiscal policy.

Slovak central bank governor Peter Kazimir echoed the warning, saying it would be “a mistake” to downplay these risks.

The ECB last week kept borrowing costs unchanged for a second straight meeting, signaling its rate-cutting cycle may be over.