The EUR/USD pair moves lower toward the 1.1990 region during the early European session on Wednesday, ending a four-day winning streak. The pullback comes after the pair retreated from a fresh five-year high, driven by a modest rebound in the US Dollar (USD). Market attention now turns firmly to the US Federal Reserve’s interest rate decision later in the day.
On Tuesday, US President Donald Trump stated that he would soon announce his choice for the next Federal Reserve Chair, adding that interest rates would decline under the new leadership. These remarks have raised concerns among investors about the Fed’s independence if a Trump-backed candidate is appointed. Such uncertainty could limit upside potential for the USD and offer underlying support to EUR/USD.
Investors widely expect the Federal Reserve to keep interest rates unchanged within the 3.50%–3.75% range. However, traders will closely analyze the accompanying statement and press conference for signals on the timing and pace of potential rate cuts.
Meanwhile, the Euro remains influenced by the European Central Bank’s cautious policy stance. ECB officials have signaled no urgency to adjust interest rates, with inflation hovering close to the target. Policymakers avoided discussions on rate changes at the December meeting, reiterating a data-dependent, meeting-by-meeting approach. As a result, expectations for additional rate cuts this year have largely faded amid mixed economic signals from the Eurozone.
