- EUR/USD gains ground to near 1.1615 in Wednesday’s early European session.
- Easing Middle East tensions supports the Euro against the US Dollar.
- Fed officials support the wait-and-see approach, watching price data.
The EUR/USD pair edges higher to around 1.1615 during the early European session on Wednesday. The improved risk sentiment provides some support to the Euro (EUR) against the Greenback. Traders will take more cues from the Federal Reserve’s (Fed) Chair Jerome Powell testifies later on Wednesday.
Israel and Iran signaled that the air war between them had ended, at least for now, after US President Donald Trump publicly scolded them for violating a ceasefire he announced. The de-escalation of tensions in the Middle East could underpin riskier assets like the shared currency in the near term.
Across the pond, Federal Reserve (Fed) Chair Jerome Powell said on Tuesday that the US central bank will continue to wait and see how the economy evolves before deciding whether to reduce its key interest rate. Meanwhile, Kansas City Fed President Jeff Schmid noted early Wednesday that the Fed has time to study tariff effects on inflation before any rate decision.
Less dovish tone from the Fed officials could lift the US dollar and cap the upside for the pair. Money markets have fully priced in two Fed reductions by the end of 2025, with a first move in September far more likely than next month, though expectation of a July reduction rises from last week.
