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The Euro stays pressured near one-month lows amid concerns over the impact of the EU-US trade agreement.
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Preliminary Eurozone GDP data surprised to the upside, showing growth in Q2.
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Forex markets are expected to remain range-bound ahead of the Federal Reserve’s policy announcement.
The EUR/USD pair hovers near one-month lows, poised for its first monthly decline since December after two days of sharp losses. Despite better-than-expected preliminary Eurozone GDP data, concerns over the economic impact of the new EU-US trade agreement continue to weigh on the Euro.
During Asian trading, the Euro made a modest recovery from five-week lows, briefly touching 1.1575 before easing to the 1.1550 level in early European hours—leaving the pair nearly flat for the day and around 2% below its July 1 peak.
Investor focus now turns to the Federal Reserve’s policy decision later today, where rates are expected to remain unchanged. However, markets will closely watch Fed Chair Jerome Powell’s comments for clues on future rate cuts, especially following recent public pressure from President Trump calling for monetary easing—raising concerns about the Fed’s independence.
In Europe, Q2 GDP posted a 0.1% rise, outperforming the flat growth forecast, though down from 0.6% in Q1. German and French economic data also beat expectations, but these positive surprises have had limited influence on the Euro’s trajectory.
Daily Market Movers: US Dollar Firm Ahead of Fed Decision; EUR/USD Under Pressure
- The US Dollar holds firm ahead of the Federal Reserve’s policy announcement, emerging as the key beneficiary of recent trade developments. While US-China talks in Stockholm ended without a major breakthrough, upbeat remarks from President Trump hint at a possible extension of the trade truce past the August 12 deadline.
- In Europe, fresh data reveals mixed economic signals. Germany’s GDP shrank by 0.1% in Q2, in line with expectations, while Retail Sales jumped 1.0% in June—doubling analyst forecasts. Meanwhile, France’s economy outperformed, with Q2 GDP accelerating to 0.3%, and consumer spending rising by 0.6% against the anticipated 0.1% decline.
- Markets now await the US Fed’s rate decision later today. Analysts expect the central bank to hold rates steady, with attention focused on Chair Powell’s tone and outlook. Ahead of this, US preliminary GDP is projected to show 2.4% annualized growth in Q2, rebounding from a 0.5% contraction in Q1.
- On Tuesday, JOLTS Job Openings dropped to 7.43 million from 7.77 million in May, signaling potential labor market softening. Meanwhile, the Conference Board’s Consumer Confidence Index beat expectations, though concerns about tariffs linger among consumers. These mixed signals caused the US Dollar to pare back earlier gains.
EUR/USD Technical Outlook: Bearish Bias Persists Near 1.1450
EUR/USD remains under pressure, hovering near its lowest levels in a month. Despite short-lived rebounds, the pair struggles to hold gains as investors continue favoring the US Dollar ahead of the Fed’s rate decision.
After a nearly 2% decline over two days, the Euro saw limited recovery capped at 1.1575 on Wednesday. A break above 1.1600 (Tuesday’s high) could pave the way for further gains toward 1.1680 and the 1.1700 zone.
On the downside, immediate support lies at 1.1520 (Tuesday’s low) and the key 1.1500 psychological barrier. A sustained drop below that could expose the pair to further declines toward 1.1450—levels last seen in mid-June.
The 4-hour RSI has risen from oversold territory, indicating room for a short-term bounce, though the overall bias remains bearish.
