- A stable euro exchange rate of about 1.1715 has heightened international tariff issues.
- The FOMC minutes reveal that a majority of officials support at least one rate cut this year.
- Some members of the Fed are considering July cuts if favorable data is available.
The EUR/USD pair ended Wednesday’s trading session up more than 0.17%, following the release of the Federal Open Market Committee (FOMC) meeting minutes from June. At the start of the Asian session, the pair stood at 1.1715, showing little change as of this writing.
According to the FOMC minutes, most Federal Reserve officials are leaning towards a rate cut later this year. Additionally, a few officials indicated that if the data supports it, a cut could be implemented as early as July.
On a different note, Washington has resumed sending customs notifications to several nations—including the Philippines, Moldova, Algeria, Iraq, Libya, Brunei, Sri Lanka, and Brazil—imposing tariffs ranging from 20% to 50%.
The euro’s value has declined somewhat, despite reports that the White House isn’t imposing extra tariffs on the European Union and can provide some exceptions from the baseline 10% rate.
Daily Digest Market Mover: Euro Trading Affected by FOMC Minutes and Rate Cuts
The strength of the dollar continues to weigh on the EUR/USD. The US Dollar Index (DXY) remained unchanged at 97.51 by the end of Wednesday’s session.
Key factors affecting the market included the news of tariffs announced by Washington: 20% on the Philippines, 25% on Moldova, 30% on Algeria, Iraq, Libya, 25% on Brunei, 30% on Sri Lanka, and 50% on Brazil.
In addition, market participants reflected on the latest FOMC insights, noting that some Federal Reserve members do not predict any rate cuts until 2025. They expressed that inflation expectations have escalated while inflationary pressures remain a concern, alongside indicators of ongoing economic stability. All participants agreed that the current policy rate is crucial, and they acknowledged that risks have been somewhat diminished, despite still being elevated.
Furthermore, Trump mentioned that he might take a tougher stance on trade, hinting at duties on pharmaceuticals, semiconductors, and copper, suggesting a 50% tariff might be forthcoming.
The EU noted progress in trade framework agreements. According to EU spokesperson Olof Gill, Ursula von der Leyen spoke with Trump on Sunday, describing the exchange as positive.
Euro Technology Outlook: The EUR/USD Stays Close to 1.1700
The EUR/USD is currently trading sideways between 1.1700 and 1.1720, with the pair struggling to overcome significant support at 1.1700. The relative strength index (RSI) indicates ongoing buyer interest, but momentum is waning temporarily.
For continued upward movement, the EUR/USD must surpass 1.1720 before testing the July 7 peak of 1.1789. The resistance levels are noted at 1.1800 and then a year-to-date high at 1.1829.
If the pair drops below 1.1700, the initial support level indicated by the 20-day Simple Moving Average (SMA) is at 1.1649. A further decline could target the 1.1600 mark followed by the 50-day SMA at 1.1448.
