The EUR/USD pair remained steady around 1.1610 during early Asian trading on Wednesday, as investors stayed cautious ahead of the Federal Reserve’s interest rate decision later in the day. The release of US May retail sales data is also expected to draw market attention.
The Fed is widely expected to leave its benchmark interest rate unchanged at a target range of 3.50% to 3.75% during its June policy meeting. Traders will focus closely on the accompanying press conference for signals on whether Fed officials are leaning toward further rate increases to contain inflation or potential cuts, as US President Donald Trump has repeatedly urged.
Hawkish commentary from Fed policymakers could strengthen the US dollar and weigh on EUR/USD in the near term. According to the CME FedWatch tool, markets are pricing in a 42.6% chance that the US central bank will deliver a 25 basis point rate hike by year-end.
Meanwhile, a potential agreement to reopen the Strait of Hormuz could support risk appetite and benefit the euro. US Vice President JD Vance said on Tuesday that President Trump may announce a preliminary deal to end the conflict with Iran before Friday, after Trump stated that the agreement had already been signed.
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