- EUR/USD is expected to rise towards 1.1500 during Wednesday’s Asian session.
- The Federal Reserve is likely to maintain stability during its June meeting on Wednesday.
- While hawkish expectations for the ECB support the euro, ongoing tensions between Israel and Iran could complicate matters.
The EUR/USD currency pair seems poised to draw some interest around 1.1500 during the Asian trading hours on Wednesday. Recent US economic data has been rather gloomy, putting pressure on the dollar. Yet, the ongoing conflict between Israel and Iran might prompt some shifts for this significant pair. Traders will be paying close attention to the Federal Reserve’s interest rate decision later in the day.
A growing mistrust in US economic policies could undermine the dollar against the euro. Data from the U.S. Census Bureau revealed a 0.9% month-on-month decrease in retail sales for May, a worse outcome than the 0.7% decline that had been anticipated. Additionally, industrial production also saw a drop of 0.2% month-on-month in May, which was less favorable than the expected minor decline.
Market expectations suggest that the federal government will refrain from altering its borrowing costs in June. Reports indicate there’s around an 80% chance of a rate cut in September.
“In the near term, a careful tone will likely resonate, but it’ll be interesting to see how new predictions are interpreted and navigated,” one analyst noted.
Hawkish sentiments from the European Central Bank (ECB) are providing support for the euro. ECB President Christine Lagarde has indicated that the era of rate cuts might be over, as central banks feel “in a good position” to tackle ongoing uncertainties.
On another front, investors are keeping an eye on geopolitical risks. Israel intends to intensify its actions against Tehran, and the US may consider a greater involvement as tensions rise. A noticeable escalation could lead to an uptick in demand for safe-haven assets, which might ultimately favor the dollar.
