- EUR/USD has seen some declines ahead of the Eurozone’s consumer price index release.
- The US dollar may strengthen further as the Fed appears likely to keep interest rates steady in July.
- President Trump has indicated a potential deal with European nations.
EUR/USD recently capitalized on gains from a previous session, hovering around 1.1620 during Thursday’s Asian trading hours. Investors are keenly awaiting the harmonized consumer price index (HICP) data for the Eurozone, expected later that day. The attention will then shift to the US retail sales figures for June, which will be released later in North America.
Moreover, the US dollar could see further appreciation as the Federal Reserve is anticipated to maintain overnight interest rates in the 4.25%-4.50% range during July’s policy meeting, largely due to uncertainties tied to tariffs.
On Wednesday, President Trump announced plans to communicate with over 150 nations regarding a 10% tariff they would incur. He specified that these nations aren’t “large” like China or Japan and suggested that the tariff rate might increase to 15-20%, though he didn’t provide concrete details.
Later, Trump mentioned that Fed Chairman Jerome Powell’s resignation would disrupt the market, hinting at the need for his role. He also alluded to a possible agreement with Europe, stating it’s premature to discuss tariffs on Canada. However, he noted that a tariff agreement with India is nearing completion.
Concerns around inflation in the US for June have reignited worries about persistent long-term interest rates. Dallas Fed President Rory Logan commented that the Fed may need to maintain higher rates for some time to manage inflation amid pressures from Trump’s tariffs. Meanwhile, New York Fed President John Williams stated that the current monetary policy is appropriate for monitoring the economy before making further decisions.
