EUR/USD traded little changed around 1.1815 during Thursday’s Asian session, with the US Dollar (USD) stabilizing against the Euro (EUR) after sliding to a three-and-a-half-year low. Market participants are now focused on the upcoming remarks from European Central Bank (ECB) President Christine Lagarde later in the day.
Fed signals gradual easing path
As expected, the Federal Reserve (Fed) cut rates by 25 basis points at its September meeting on Wednesday and indicated that further reductions are likely before year-end. Fed Chair Jerome Powell described the move as a risk-management adjustment in response to labor market weakness but emphasized that policymakers are not rushing into aggressive easing.
Powell also noted that the Fed’s rate path should not be viewed as a firm commitment, highlighting that elevated inflation remains a risk. His cautious tone—less dovish than some investors anticipated—could lend short-term support to the Greenback.
ECB stance supports the euro
In the eurozone, recent inflation data reinforced the ECB’s decision to leave rates unchanged at its latest meeting. Growing expectations that the central bank has concluded its rate-cutting cycle could provide a floor for the common currency against the USD.
Several ECB policymakers echoed that view this week. Governing Council members Martins Kazaks and Gediminas Simkus suggested there is no immediate need for additional cuts, though neither excluded the possibility in the future. Meanwhile, ECB Vice President Luis de Guindos said on Wednesday that the current policy stance remains appropriate given inflation dynamics and the effectiveness of monetary transmission.
