EUR/USD steadied around 1.1550 in cautious trade on Wednesday ahead of the Federal Reserve’s policy decision. Traders price in a near-certain hold on rates, fueling dollar strength amid sticky inflation data.
Market Snapshot
The euro edged up 0.11% to 1.1518 against the dollar early Wednesday, stabilizing near the 1.1550 mark after recent losses. US stock futures slipped, with S&P 500 (SPX) contracts down 0.2%, while 10-year Treasury yields eased 5 basis points to 4.234%. Gold (XAU) dipped to $2,5169 per ounce as safe-haven bids faded against a firm dollar.
Fed Expectations
Markets assign 99% odds the Fed keeps its federal funds rate at 3.50%-3.75%, per CME FedWatch data. Focus sharpens on the Summary of Economic Projections and dot plot, with the median now signaling just one 25-basis-point cut in 2026. Core PCE inflation lingers at 3.0% year-on-year, bolstering the case for patience.
Dollar Drivers
The dollar index (DXY) hovered near 99.30, supported by resilient US labor data and producer price gains that delayed easing bets to June. ECB-Fed policy divergence weighs on the euro, as Europe faces softer growth and earlier rate cuts. “The Fed’s data-dependent stance keeps the dollar on carry,” said a forex trader at a major bank.
Asset Ripples
Wall Street indexes pared gains, with Nasdaq futures off 0.3% amid tech sector caution. Brent crude (LCOc1) held above $80 a barrel, capping risk-off flows despite Middle East tensions. Eurozone yields fell, with German bunds down 3 basis points, reflecting growth worries.
