EUR/USD trades cautiously with Fed policy decision on the horizon – FXStreet

January 29, 2025

EUR/USD decreases to nearly 1.0400 because investors are waiting for the results of the Fed policy.
The Fed is expected to stabilize interest rates with a slight outlook for hawks.
Trump's tariff plan and Dovish ECB betting are expected to maintain the euro on the hind legs.

EUR/USD slides nearly 1.0400 in a European session on Wednesday, and investors are focusing on the Federal Reserve (Fed) monetary policy announcement at 19:00 GMT. The Fed is expected to stabilize interest rates within 4.25 % to 4.50 %, as the excavation tendency to go to 2 % of the central bank has stagnated and the labor market is stable. I am.

The market is completely priced, so the investor will pay close attention to the Fed Chair Jerome Powell's press conference after the Policy decisions to maintain the Fed without changing the price. Investors are the period in which the Fed maintains interest rates at the current level, considering the stubborn inflation on the assumption that a large amount of tariffs by President Donald Trump in the United States (US) will increase the price of products and services. You will want to know.

The fact that Trump is seeking higher tariffs for trading partners is increasing concerns about global growth. Trump recommends tariffs on pharmaceuticals, steel and sophisticated chips to support domestic production. On the other hand, 25 % of the tariffs in Canada and Mexico, 10 % of the cards in China. Leavittt said that 25 % of the 25 % tariffs in Canada and Mexico from February 1 “are still in the book.” Leavitt has added from Saturday that “10 % of tariffs are still being considered in China.”

Prior to the Fed's policy decision, US dollars (USD) are modestly traded, and the US dollar index (DXY) shakes around 107.90. The US dollar has been strongly functioning in the past few months, assuming that Trump tariffs accelerated price pressure and forcing the Fed to prevent the Fed from changing longer.

Today's US dollar price

The following table shows the US dollar (USD) change rate for today's listed currency. The US dollar was the strongest for Australian dollars.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	Chf
USD		0.27 %	0.18 %	-0.11 %	0.20 %	0.41 %	0.35 %	0.20 %
EUR	-0.27 %		-0.09 %	-0.36 %	-0.07 %	0.13 %	0.09 %	-0.07 %
GBP	-0.18 %	0.09 %		-0.29 %	0.02 %	0.22 %	0.16 %	0.01 %
JPY	0.11 %	0.36 %	0.29 %		0.30 %	0.51 %	0.44 %	0.30 %
CAD	-0.20 %	0.07 %	-0.02 %	-0.30 %		0.20 %	0.14 %	-0.01 %
AUD	-0.41 %	-0.13 %	-0.22 %	-0.51 %	-0.20 %		-0.06 %	-0.21 %
NZD	-0.35 %	-0.09 %	-0.16 %	-0.44 %	-0.14 %	0.06 %		-0.15 %
Chf	-0.20 %	0.07 %	-0.01 %	-0.30 %	0.00 %	0.21 %	0.15 %

The heat map shows the changing rate of major currencies to each other. Basic currencies are selected from the left row, and the quota is selected from the top line. For example, if you select US dollars from the left row and move to the Japanese yen along the horizon, the change rate displayed in the box indicates USD (base)/JPY (QUOTE).

Mover of Daily Digest Market: EUR/USD becomes thinner because the ECB seems to be set to reduce the rate four times in a row.

Another reason behind the cautious performance of the EUR/USD pair is the monetary policy meeting of the European Central Bank (ECB) scheduled for Thursday. Traders have been completely priced due to interest rates of 25 Basis points (BPS), reducing deposits to 2.75 %. Market participants are also convinced that ECB will continue to reduce major borrowing rates at all meetings by summer. Such a scenario will not be good for the short and long -term outlook for the euro.
In the fear that Trump's tariffs weakened the Euro economy that had already fluttered, ECB's Dovish bet has accelerated. Germany, the Germany of shared blocks, is expected to be contracted this year, said on Tuesday, on Tuesday. The government hopes that the German economy will shrink for the third consecutive year because the government could not deal with the structural weakness of the national economy. “The situation is very serious. Especially the growth of the industry is struggling with a structural break,” said BDI President Peter Ray Binger.
Investors are eager to focus on ECB President Christine Lagald's press conference on how the former continent deals with Trump tariffs. Last week, at the Davos's World Economic Forum (WEF), Lagard warned that Europe had to “predict what would happen” and “prepared to respond.”
ING's analyst says, “The threat of tariffs can be more seriously recognized in consideration of the positive plan of the Ministry of Finance, which greatly reduces the possibility of the rise of the euro.” Monday. In addition, US Finance Secretary Scott Bessent suggested that 2.5 % tariffs were imposed universally and led them to raise them at the same pace every month.

Technical analysis: EUR/USD is close to 20 days of EMA

The EUR/USD is the highest value of 1.0530 on Monday, approaching the 20 -day index transfer (EMA), which is about 1.0395 on Wednesday. The main currency pairs are weakened after the 50 -day EMA traded, about 1.0450.

The 14 -day relative intensity index (RSI) suggests that after recovery from the 40.00 level or less, it cannot rise beyond 60.00 hurdles, which will turn sideways.

Looking down, it will function as a major support for pairs nearly 1.0300, which is a high price of 1.1209, from September 30, 2024, with a minimum of 1.0266 on January 20. Conversely, the highest value of 1.0630 on December 6 is an important barrier for Eurobots.

Economic index

FOM interest rate decision

Federal preparation system (FED) We will discuss monetary policy and determine interest rates at a meeting that has been scheduled eight times a year. There are two orders to keep inflation at 2 % and maintain full employment. The main tool to achieve this is to set interest rates. Both are rented to banks and banks. If the rate is decided, US dollars (USD) tend to strengthen to attract more foreign capital. Reducing interest rates tends to weaken USD because capital is discharged to countries that provide higher returns. If the fee has not changed, the tone of the Federal Open Market Committee (FOMC) will be paid to the tone, which will be Hawkish (expecting future interest rates) or DOVISH (future interest rates. It is important to note whether it is expected to decline).