EUR/USD dipped to about 1.1785, marking a near two-week low during early Asian trading on Thursday. The US dollar gained strength against the euro after a recent FOMC meeting hinted at a possible interest rate increase if inflation continues to be high.
Minutes from the January policy session revealed that nearly all FOMC members were in favor of keeping interest rates steady, with only a handful advocating for a decrease. However, they didn’t completely dismiss the possibility of rate cuts should inflation decrease as planned. Interestingly, Fed officials expressed a desire for a more balanced narrative regarding future decisions, with several members indicating that rate hikes might be necessary if inflationary pressures persist.
On the other side of the Atlantic, Financial Times has reported that Christine Lagarde, President of the European Central Bank (ECB), might step down sooner than her anticipated exit in October 2027. While Lagarde hasn’t specified a timeline for her resignation, she seems to want to give French President Emmanuel Macron and German Chancellor Friedrich Merz time to select her successor, according to sources.
Traders are gearing up to closely monitor the upcoming preliminary Purchasing Managers’ Index (PMI) data for Germany and the eurozone, set to be released on Friday. If the results come in stronger than expected, it could help mitigate losses for the euro in the short term.
