EUR/USD is trading mildly lower near 1.1690 in early European hours on Thursday. Despite the decline, the Fed’s dovish rate cut on Wednesday may continue to weigh on USD sentiment, offering some support to the euro. Traders now shift focus to the upcoming US Initial Jobless Claims release, which could influence the pair’s intraday direction.
Fed maintains dovish tone but signals data dependence
The Federal Open Market Committee lowered the benchmark funds rate by 25 basis points, setting the new target range at 3.5%–3.75%. In its statement, the Fed emphasized that further rate decisions will depend on incoming economic data, evolving conditions, and the balance of risks.
During the post-meeting press conference, Chair Jerome Powell reiterated that policymakers are comfortable taking a wait-and-see approach as they assess the impact of recent rate cuts. Market pricing now indicates a 78% chance that the Fed will keep rates unchanged at its next meeting – up from 70% just before the announcement – according to the CME FedWatch tool.
ECB expectations lend support to euro
Meanwhile, expectations that the ECB has reached the end of its rate-cutting cycle are helping underpin the euro. President Christine Lagarde reaffirmed that the current policy stance remains appropriate. Supporting this view, ECB officials Francois Villeroy de Galhau and Gediminas Simkus noted that there is no urgent need to adjust rates in either direction, suggesting policymakers believe the eurozone is in a balanced monetary position.
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