Market Update: EUR/USD Trends Higher

As trading began in Europe on Thursday, the EUR/USD pair was showing an upward trend, hovering around 1.1980. The US dollar continues to lose ground against the euro, primarily due to ongoing uncertainties about the US economic policy direction. Market participants are awaiting the release of consumer confidence data from the Eurozone and new jobless claims in the U.S. later today, which could provide more insights.

Traders are increasingly worried about the unpredictable policy decisions coming from US President Donald Trump, as well as the independence of the Federal Reserve. These factors have led to a weakening of the dollar and have supported major currency pairs. On Tuesday, President Trump announced that he would soon name a new chair for the Federal Reserve, and mentioned that interest rates could see a significant drop once the new chair is in position.

Meanwhile, during a recent policy meeting, the Federal Reserve decided to keep interest rates steady in the 3.5% to 3.75% range. Chairman Jerome Powell indicated during a press conference that the economic outlook has improved compared to the previous meeting, with some positive signs in the labor market, although he also pointed to ongoing signs of a slowdown.

Fed officials are adopting a more cautious stance regarding potential future rate cuts. The market generally anticipates that the Fed will refrain from making any changes to its benchmark interest rate until at least June. If the Fed continues to maintain its more hawkish position, it might help stabilize the dollar in the near term.

Across the Atlantic, economists widely believe that the European Central Bank (ECB) will keep interest rates steady in its upcoming meeting in February, maintaining this approach at least until mid-2026. The ECB has suggested that current interest rates are adequately positioned to ensure medium-term price stability.