The EUR/USD pair is experiencing mild losses, hovering around 1.1465 during the early Asian session on Thursday. The US Dollar is gaining ground against the Euro, driven by a hawkish Federal Reserve (Fed) decision to maintain interest rates within the 3.5%–3.75% range at its July policy meeting. Market participants are now focusing on upcoming Eurozone and German GDP figures for Q2, which could influence the pair’s trajectory.
While the Fed’s stance on holding rates was broadly anticipated, three officials dissented, advocating for a 25 basis point rate hike. Dallas Fed President Lorie Logan, Cleveland’s Beth Hammack, and Minneapolis Fed’s Neel Kashkari voiced concerns about rising inflation. In his press conference, Fed Chairman Kevin Warsh emphasized the central bank’s commitment to achieving its 2% inflation target, signaling a data-dependent approach to future policy decisions.
Attention will shift to Eurozone and German GDP data later on Thursday. Analysts predict the Eurozone GDP to show a modest 0.2% quarterly growth in Q2, following a prior contraction of 0.2%. Germany’s GDP is forecast to rise 0.1% in Q2, down from the previous 0.3% expansion. Stronger-than-expected economic data could bolster the Euro, while weaker outcomes may lead to further depreciation.
European Central Bank (ECB) policymaker Peter Kazimir underscored the likelihood of additional rate hikes to curb inflation, suggesting tighter monetary policy may be necessary. Market sentiment reflects expectations of at least two ECB rate increases, with the first anticipated by October and a second by March, per Reuters.