In Asian trading on Thursday, the EUR/USD pair continued its upward trend, reaching approximately 1.1670. Major currency pairs are experiencing gains as the US dollar remains under pressure due to a dovish stance from the Federal Reserve and entrenched trade tensions with China.
As of the latest data, the US Dollar Index (DXY), which measures the dollar against six key currencies, had dipped to around 98.50, marking its lowest point in a week.
There’s increasing speculation that the Federal Reserve might lower interest rates as the year progresses, primarily due to mounting concerns regarding the labor market.
The CME’s FedWatch tool indicates that 94.6% of traders believe the Fed will cut rates by 50 basis points (bp) to a range of 3.50-3.75% by the end of the year.
During a press conference on Tuesday, Federal Reserve Chairman Jerome Powell highlighted the growing risks to the labor market, mentioning that “downside risks to the U.S. job market are increasing.” However, he refrained from commenting on the anticipated monetary policy for the remainder of the year.
Meanwhile, U.S.-China trade relations are seeing a challenge, as President Donald Trump expressed his intention to urge Beijing to halt oil purchases from Russia. Despite this, trade tensions might be short-lived, given that President Trump and Chinese President Xi Jinping are expected to meet in South Korea later this month to discuss trade matters.
In the eurozone, French Prime Minister Sébastien Lecornu has decided to delay contentious pension reforms until after the 2027 presidential election, which may help him avoid a no-confidence vote in his cabinet.
