During Tuesday’s Asian session, EUR/USD dipped slightly, unable to build on the recovery seen the previous day near the 1.1415-1.1410 range, close to its lowest point since July 2025. Currently, it trades just under the valuable 1.1500 mark. However, it seems that the downward movement is slowing down as key central bank events approach.
The US Federal Reserve is set to reveal its policy decision following a two-day meeting on Wednesday, ahead of the European Central Bank’s (ECB) gathering on Thursday. Policymakers are considering the potential for renewed inflation, particularly due to rising oil prices since the onset of the Iran conflict. Thus, the outlook on monetary policy will be crucial in influencing the near-term path of EUR/USD.
At the same time, there are growing expectations that the Federal Reserve might postpone rate cuts. This has led to increased demand for the U.S. dollar (USD), helping it maintain gains from its May 2025 peaks overnight. Conversely, the euro faces pressure from worries that elevated oil prices could hamper economic growth in the eurozone, which is heavily reliant on imported energy. This presents a challenge for the EUR/USD pair and bullish traders should acknowledge this factor.
On another note, US President Donald Trump has urged nations to assist in restoring shipping traffic in the Strait of Hormuz. This could gradually improve global risk sentiment, as shown by the positive vibe in equity markets, potentially limiting substantial gains for safe-haven currencies like the dollar. Thus, it might be prudent to wait for a definitive downward trend in the EUR/USD before committing to a trade.
